Joan Burton (Dublin West, Labour)

I refer to amendment No. 12. The Minister is taking extraordinary powers onto himself to provide for the extension of most of the guarantee. He has suggested he will exclude the dated subordinated debt, some of which was included in the original guarantee. This was pointed out at the time by the Labour Party as being completely inappropriate because it was high risk capital, which should not have been the subject of a guarantee.

When does the Minister propose to permit the banks to avail of the Bill's provisions? Will this happen prior to the establishment of NAMA, following the establishment of NAMA or in tandem with its establishment? Under the NAMA exercise, the taxpayer will take on for between ten and 20 years a level of debt relating to impaired loans, which the Minister suggested will be significant, the IMF has conservatively estimated at €25 billion and others have suggested will be much higher. Once the agency is in place, the Government will have imposed on this and the next generation of taxpayers significant public debt. When the banks receive the agency's bonds, they will be entitled to discount them on the market or go to the ECB, and I am sure that is what they intend to do.

I do not know what will be the discount applying to the bonds, as it will depend on the market's take on the value of Irish debt at the time which, in turn, will be heavily influenced by the valuation attaching to the assets taking on by NAMA. One newspaper, in particular, seems to be close to the Minister's Department and over the weekend it suggested the discount would be 16%, which is an unbelievable figure given the example I outlined previously of the two blocks currently for sale in the AIB bank centre and which are under negotiation. This will involve maintaining a 15-year lease with the bank to use the blocks as offices, which will be a first class tenant at the most desirable address in the city, Dublin 4, but it is estimated the discount that will apply will be at least 45%. Even at that discount, which is being offered through the media and advertising, there are no takers. A sovereign wealth fund was interested but it backed out because, apparently, the discounted price was too high.

The Minister is not giving us any information that allows us to make a financial assessment of what he is suggesting. If NAMA becomes another life raft for the banks and, in addition, this scheme is provided as a third layer, the bankers will be laughing all the way to the bank. We have no indication. At the end of the day, banking is a business and it is driven by activity. In the same way a person visits a shop or a garage or an engineering firm where a product is sold, the Minister is not able to tell us what it will do for the taxpayer who is taking on this extraordinary level of debt other than it will be a financial engineering structure. In years to come we will not have sufficient hospitals, Luas or metro lines. Like oxygen being sucked out of a house, NAMA will suck significant debt capacity out of Ireland for 15 to 20 years unless there is a miraculous turnaround in the economy and the debt is repaid much faster. This is real debt, which we will incur as a country and the Minister is saying that having cleansed the banks of the NAMA debts, he will provide this additional open ended guarantee. When will it operate? Will it operate as soon as the Minister introduces the statutory instrument or after the banks have been cleansed of their impaired loans to NAMA?

Because of the sovereign guarantee being offered by the Minister, this also will be sovereign debt. Ireland is paying two or more percentage points above the ECB borrowing rate on all its debt because the Government gave a sovereign guarantee on approximately €440 billion last September. It is a massive overhang and everybody knows that if this goes wrong, that is the amount we owe, but if everything goes right, we will owe between €25 billion and €60 billion through NAMA. Ireland is paying a higher premium on its borrowings than Greece while the credit rating agencies have marked us down. One of the reasons our reputation has not recovered is the perception that Ireland is a murky pit where deals are done among friends and there is no transparency about what the Minister proposes. He has still produced this measure and I do not know what will be the financial consequence in terms of billions of euro. He has not even put an upper limit on the amount of debt he will guarantee when it is issued. At the end of day the debt will be guaranteed and, reputationally, we will be out there for this in the future.

The Minister is still not prepared to say when this will happen or what exact form it will take other than it will take approximately five years and he is still not prepared to say anything about the amounts involved. He is taking on an incredible power to facilitate banks. This is at the core of the reputational issue in Ireland. It is similar to bad rezoning. There is perceived to be a golden circle between political contacts, bankers and developers who move in a political orb while the taxpayer picks up the tab. Until he has broken the links in the golden chain and has outlined an objective, stand alone measure with the requisite information about Anglo Irish Bank and the other banks, we cannot believe him.

I refer again to the dated subordinated debt, other debt and the directors' loans at Anglo Irish Banks. A number of newspapers reported that the former managing director had large amounts on deposit with the bank at the same time as large debts, which were provisioned against. I do not know whether the deposits were part of a package or the dated subordinated debt, perhaps as part of a wider package held by insiders. We do not know the answers to any of this. However, it appears his deposits are untouchable in the context of his loans because they are without recourse. This is the type of mess that taxpayers will work hard to clear for the next 20 years and the Minister is not prepared to level with us as to how this will be done.

I visited Leitrim village last weekend, which I had not been in for a while. I counted approximately seven partially completed housing estates with unsold houses and at least two sets of three-storey apartment blocks. I felt I was in NAMA land. These are the assets NAMA will pick up, but who will buy these places, even in ten or 20 years? Driving through towns and villages, one comes across areas like this with an extraordinary level of development. However, these developments are not occupied. There may be a sprinkling of places let as holiday homes or to immigrant workers, but apart from that these places are empty.

Will the Minister tell us when this scheme will be introduced, for whom it is intended and what amounts are involved? We propose the powers the Minister has should be deleted, because we believe it is wrong for him to have them. Given he already proposes to rescue the banks via NAMA, why do they need a further unlimited guarantee for an unlimited sum of money?

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