Kieran O'Donnell (Limerick East, Fine Gael)

I am glad to hear that.

As the Minister of State will be aware, it is estimated that there is currently enough land zoned for residential purposes to accommodate just short of 1 million housing units. At 50,000 units per year, that is the equivalent of 20 years' supply. Much of that land will end up in NAMA. It will be nothing more than agricultural land. How can NAMA be justified on pure financial and economic grounds? NAMA will have to pay the cost of Government bonds, probably of the order of 5%, and we are looking at a rate of return on the assets that could, according to projections, be as low as 4%. This is a loss-making situation and will not bring about a flow of credit to small businesses or to mortgage holders. As Deputy Bruton said, the banks would continue to shrink their balance sheets even if their toxic and related assets were taken over by NAMA.

We all know businesses are dying on their feet from lack of credit. There is an old saying in business - cash is king. If a business does not have cash it cannot function. Small businesses are the backbone of our economy and employ around 700,000 people throughout the country in cities, towns, villages and rural areas. They provide employment and spending and a flow of funds to other businesses. One of the critical issues at the moment is that businesses are unable to pay each other, which is a knock-on effect of the lack of credit.

Judged objectively, NAMA does not pass the test on two accounts. It does not pass the economic and financial test based on the returns - the cost of buying the asset will outweigh the return - and it does not pass the crucial test of providing a flow of funds to small businesses. We have put forward an alternative model which is different from that of the Government. The bondholders must take a share of the risk because the taxpayer is taking an exorbitant share of the risk at the moment. We suggest the establishment of a national recovery bank which would provide funds to the banks for the specific purpose of ensuring a flow of credit. NAMA is not specific to that purpose; it is about taking non-performing toxic assets from the seven covered institutions and hoping that the performing assets it takes on provide sufficient return to counterbalance the losses on the toxic assets. It is a massive gamble at the taxpayers' expense. The risks are too high and outweigh any of the advantages of NAMA.

The legislation to establish NAMA has yet to come before the House. I ask the Minister to consider the model Fine Gael is proposing. It is a straightforward model based on sound economic principles. We recommend that a national recovery bank be set up to provide funds to the existing banks for good commercial and housing transactions, particularly by homeowners and small businesses. Second, we must ensure that the banks, over the period of the guarantee, up to September 2010, try to deal with their toxic assets. They have the knowledge and are dealing with the people who have the loans. They should find ways of obtaining value for money on these assets. After September 2010, funds should be flowing to small businesses through the national recovery bank and any toxic debts in the existing banks will be left there. Effectively, they are asset recovery agencies. We would set up good banks from within the existing banks using the good assets that are performing. This would give confidence to the markets in providing funds to the banks, and the national recovery bank will continue to perform its role.

We have a financial crisis such as has never before been seen in Ireland. We must find ways of ensuring that jobs are maintained. A first critical step in this is to ensure banks are providing credit to small businesses. There is no disagreement on that among Government or Opposition; the problem is with the methodology. NAMA is a theoretical model based around freeing the banks of any responsibility in terms of the toxic assets they have created. To use an analogy, we are taking all the toxic assets and burying them in a hole for a period of three or four years - out of sight, out of mind. The danger is that in three or four years the grass will suddenly start to turn brown because of the toxic assets underneath. Certainly, NAMA will provide a window of time in which the toxic assets are unseen, but will it provide funds for small businesses? It will not. It is a short-term solution for the banks but it will result in major headaches in terms of getting the economy moving again and allowing small businesses to recover. I hope the Government will accept this advice in the spirit in which it is given.

The Minister of State gave me to understand that the Minister would be in the House in a couple of minutes. Regrettably, he is not here. I hope he is hearing these deliberations.

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