M J Nolan (Carlow-Kilkenny, Fianna Fail)

This is possibly the most important legislation that has come before this Dáil and I support it. The NAMA legislation is a response to the financial crisis that the country finds itself in as part of a global economic crisis. As a result of our circumstances, we have been more affected than many of our European partners or other economies.

I commend the Government, particularly the Minister for Finance, who has undergone a baptism of fire since the crisis began a year ago. At short notice and only a relatively short time in the portfolio, the Minister had to deal with it. By common consent, it has been universally recognised that the Minister for Finance is coming to grips with this crisis and dealing with it in a commendable manner.

There is a long way to go and the legislation before us faces a long journey through the Oireachtas. It is in all our interests, however, that it is passed speedily. I was glad to hear the Minister in interviews talk about accommodating individuals and parties if proposals were introduced on Committee Stage that would strengthen the legislation. Early in the summer, the Minister published the draft legislation so interested parties could debate and consider it. Of all the proposals made to deal with the unprecedented economic downturn we have seen, this is by far the best solution. For that reason, I have no difficulty in supporting it.

Some of the debate has been strange, to put it mildly, in that we hear individuals saying that in the good times the money was wasted. I disagree with that theory. Over the years we have invested wisely in infrastructure, with intercity motorways being a fine example. We invested significantly in education at all levels, in teachers and in resources. Local authority housing has seen a huge investment at a huge cost to the State. One might say, looking back, that some of the prices we had to pay for those houses were inflated because of the boom in the construction industry. I remember an answer to a parliamentary question three years ago that we would satisfy demand when we reached a stage when we were building 45,000 units a year and there would be a levelling off of prices for house price construction. However, that building boom went on and we saw building of up to 85,000 units per annum. Looking back now, that was clearly unsustainable. Having said that, we are where we are and we have to deal with that.

We invested wisely in some areas with more gardaí, nurses, teachers and this must be acknowledged. This was happening at a time when we were running surpluses on an annual basis. We have reached this stage in our economic development and we are now in a downturn. There are individuals and families who are suffering. There is not a Member of this House who is not aware on a daily basis of the hardships being encountered by them. What disappoints me is the development of a social divide, where clear division lines have come between public service workers and private sector workers. That will not resolve anything, and I ask individuals, groups or organisations who may be going down that road to recognise that it is a dangerous path to travel. We are all in this together. We will have to resolve this together, and I implore that we step back from that divide. We have enough problems on our hands without dividing among ourselves.

The NAMA legislation before us is a response to the global financial crisis which has caused extensive and rapid deterioration in the Government finances. The principle of the Bill is worthwhile. We will not work ourselves out of this financial crisis unless we have a stable and functioning banking system. While mistakes were made in the past with the regulatory oversight of our banking system, as an outsider looking in, it seemed to me as though the banks were chasing one another, and all that happened was that one particular bank went off on a tangent, was irresponsible in its lending and was allowed to be irresponsible. I blame our regulatory system for not reining in that bank. As a consequence of that, other banks then decided to follow. We had this tail chasing going on where banks were competing with one another to give out more and more funding for clearly unsustainable developments. We now have to clean up that mess. If there is one serious lesson to be learned by the Minister and the Department of Finance, it is that we must have a strong and functioning regulatory system that oversees our financial institutions. The fact that we are now obliged to take a stake in our main banks means that we have directors on the board, and they should be in a position to see how that banking system works.

The basis of the legislation is sound. The loans will be transferred to NAMA at a discount, and while there may be some debate as to the level of the discount, I am convinced by the Minister's argument during his Second Stage contribution that the discounts will be brought back over a nine or ten year period. Over that period, I hope that we will see a surplus as a result of working through these loans. It is important that the assets are worked out and not just sold. The principle on which the Bill is based can succeed and the loans will ultimately bear fruit, so that the Government and NAMA will not be at a loss.

The Minister has been at pains to state that this has to be a transparent system. The legislation clearly outlines that. Some of the loans that will end up in NAMA will never be able to wash their face. For that reason, it is a complete package that NAMA will take over. It is also important that NAMA employs the best professionals to deal with this, not just on the basis of taking over loans and ensuring that value for money is obtained for them, but also for the valuation process. The Minister has assured us that each individual loan will be examined and that a proper value will be put on that loan. Having taken over the loans, he will need professionals on board and he has stated that he is prepared to outsource and get professional advice in dealing with them. That is not just for dealing with the loan, but also for dealing with the asset that is taken on board. There is development land that will clearly have a value for rental or whatever else. The fact that some of this land is in highly desirable areas means that the State agencies could avail of some of this for schools, hospitals, Garda stations or whatever. I am pleased to note that he has broadened the remit and that he is prepared to look at that aspect.

The financial system has been severely challenged over the past two years. This Bill will protect the financial institutions somewhat, and they need such protection at this stage. It must be at a cost and they will have to pay for it, but our economic future is dependent on having a good financial system in place. I would like to nail the lie that this is a bailout for borrowers or developers. The Minister was very clear when he stated that loans which are transferred to NAMA are still due to be repaid. NAMA is not an easy way out for borrowers or developers. That message must be put out. It is not a bailout for bankers or developers and that cannot be stated often enough.

All international banks are experiencing difficulties in accessing funding at the moment. When this Bill is passed, it will mean that our banks will be able to access funding again. It is important that the Minister and the directors he has appointed to the boards of various banks ensure that there is liquidity and that the banks lend again to small businesses and farmers. I met with a group of farmers yesterday, and one of the main difficulties they had was in securing working capital from their banks. These would be farmers with a track record stretching back two generations. Now, for the first time, they find it difficult to access working capital and funding from financial institutions. It is important, when the legislation is passed and banks are in a position to access money, that the money is lent out. That is the main purpose of the legislation.

It is important that we put on record the support of our European partners, the European institutions and, in particular, the European Central Bank. One shudders to think what might have been the outcome of this crisis had we not been part of a bigger, European community and the single currency. In that regard, I congratulate the Irish electorate which, in its wisdom, supported the Lisbon treaty last Friday. More than anything else over the past number of months, that support sent a clear message to our fellow Europeans that we want to be at the centre of decision making in Europe. That is our future, it is where we have been for the past 30 years and is where we want to remain. That message was sent out clearly on Friday.

On the upcoming budget, I am aware the Minister has started to negotiate with various Departments about their funding for 2010. He has a difficult task ahead of him to draft a budget that will be acceptable to the majority. The direction he is taking towards spending cuts rather than tax increases is the correct way to go. I heard it suggested today that if we take account of the levies imposed recently, we have an effective personal tax rate of approximately 52% or 53%. We cannot impose much more personal taxation without returning to the bad old days of the 1980s, when we had a flourishing black economy because personal taxation was far too high.

I wish the Minister well in getting this legislation through the Houses. It is positive legislation and the best available. We cannot allow things continue as they are. This is the best option, although none of us wanted to reach a stage when it had to be introduced. I wish it a speedy passage through the House.

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