Mary Upton (Dublin South Central, Labour)

I welcome the opportunity to speak on the NAMA legislation. This legislation has been called the most important since independence, but I contend that the blanket guarantee extended to the banks on 30 September last year was equally seismic. The decision to offer a blanket guarantee to all the major financial institutions closed off many of the options open to the Government and has led us to this position and this momentous legislation. Then, as now, the Labour Party opposed the blanket guarantee. It is fair to point out that we were right then and I suspect we will be proved right again.

The Labour Party has consistently and calmly argued that the temporary nationalisation of the two major financial institutions in Ireland, AIB and Bank of Ireland, is the least worst option for the Irish people. Temporary nationalisation would allow the Government to control both ends of the deal, eliminating any potential for overvaluing or undervaluing assets which are to be transferred. Instead, the Minister has categorically stated that we are to pay well above market value to the banks for their delinquent assets, using an inflated long-term economic valuation method. This is purely to shore up the banks' balance sheets and prevent the otherwise inevitable nationalisation of the banks which can no longer survive in the capitalist market, from which they were happy to profit for decades. As the economist Karl Whelan recently noted: "The idea that the only possible way to deal with banks in difficulty is to overpay them for their assets is, frankly, ridiculous."

The major flaw in the Government's NAMA scheme is the deliberate, delusional decision to overpay for assets when the market has not yet bottomed out. This decision was described yesterday by the Nobel Prize winning economist Joseph Stiglitz as "criminal". Many assets have fallen by substantially more than 47%. Indeed, the "Prime Time" television programme recently showed a view of a field in the Taoiseach's bailiwick of Edenderry which was previously valued at over €12 million but is now valued at under €2 million. There is simply no credible, non-partisan information to support the Minister's contention that we have reached the bottom of the market. A number of commentators across the economic and political spectrum have written that the Minister's figures simply are not correct and that values have fallen further than this and have further yet to fall.

That the share prices of AIB and Bank of Ireland rose 25% on the day after the full details of NAMA were announced is proof that the markets believe the State is significantly overpaying for these assets. There are hundreds of other land banks dotted around towns and villages in the country with a similar story of grossly inflated prices and no prospect of development, particularly if planning laws of any substance are introduced. All these land banks will be transferred to the National Asset Management Agency and taxpayers will be left shouldering the burden for decades to come.

Dublin, which has the greatest potential for a property bounce, has a commercial vacancy rate that is projected to rise to 27% in 2010, the highest in 18 years. Nationally, almost 80,000 houses, apartments and sites are for sale on the Daft.ie website. On a drive from Dublin to Sligo or Kerry one will pass through towns which have a glut of unsold commercial developments or housing estates on which construction has ground to a halt. It is unlikely that there will be a need for these houses and commercial spaces for years to come and certain they will not be worth what NAMA paid for them. Instead, they will be owned by us, the taxpayers, a monument to incompetent regulation, avaricious bankers and greedy developers.

The Minister has stated that the principal concept behind NAMA is to get the real economy moving again by allowing banks to lend. However, €36 billion will go to Anglo Irish Bank and Irish Nationwide Building Society which loaned almost exclusively to big developers and whose reputations are beyond recoverable. Irish Nationwide will transfer 76% of its loan book, almost €8 billion, to NAMA, while Anglo Irish Bank will transfer almost €28 billion to the agency. There is no value in paying these sums to the two institutions in question as they will never again lend in the real economy. It is dead money. We have already paid €4 billion into Anglo Irish Bank, which has to be supported form direct Exchequer borrowing this year and on which we have no prospect of ever seeing a return.

The €36 billion from NAMA which will go into these two zombie institutions is more than the entire tax take for this year. This sum would pay for metro north six times, cervical cancer vaccine for 12 year old girls for 3,000 years and cover the school book grant for 4,000 years. It could provide for a substantial, sustained early child care intervention scheme tackling educational, health and social issues at the level where most can be achieved.

Why should taxpayers bail out Anglo Irish Bank and Irish Nationwide Building Society, the homes of golden circles, loans to inflate balance sheets, executive loans and million dollar bonuses for people who run their companies into the ground? Bernie Madoff was sentenced to 150 years in jail just six months after being arrested. Unlike the United States, the authorities here do not appear capable of forcing those guilty to be held to account, to do the "perp" walk. How can we jail 167 people between 2003 and 2007 for not paying their television licence fee, while allowing those guilty of impoverishing the future prospects of the country to continue to play golf?

We need real regulation that will completely clear out those responsible for the catastrophe the banking sector has caused the real economy. This must be done without any more golden handshakes, particularly as they are now being funded by taxpayers' money. It seems, however, that Fianna Fáil is not capable of introducing legislation that would end the cosy relationships they have enjoyed for more than a decade. The party has shown this in FÁS and other semi-State boards and it will be the same old story in NAMA, under which the plain people of Ireland will be forced to shoulder the pain of the elites who creamed it during the boom.

The Minister has stated the National Asset Management Agency will pursue developers for everything they owe. The banks have admitted they have rolled up more than €9 billion in unpaid interest on developers' loans. This hardly paints a picture of a determination to pursue developers. The only bank which went after Liam Carroll and the Zoe Group is not Irish and not involved in NAMA. The NAMA banks were happy to nurse Mr. Carroll's loans until they could be transferred to the National Asset Management Agency when they would become the problem of the State, that is, the taxpayer. It is individuals such as Mr. Carroll that NAMA will reward, not those struggling with negative equity on whose homes banks are waiting to foreclose or small and medium size enterprises which will have to close because they cannot obtain credit. Thanks to the Supreme Court, we may get a solitary scalp but the majority of the developers and bankers will continue to be treated with the hospitality their years of donations to the Fianna Fáil Party have built up.

I, like every speaker in this debate, am aware that a large number of people are in negative equity. Worse still, mortgage lenders, namely, the banks, are waiting to pounce and foreclose on such people. People in negative equity do not have a national asset management agency available to them. The other evening I was visited by a constituent whose son and daughter-in-law face the prospect of having their home repossessed because they cannot meet the repayments on a 100% mortgage. No one shouted "Stop" when these types of loans were being provided by the financial institutions.

Businesses are going to the wall because they are paying unrealistic rents. According to a survey supplied by Retail Excellence Ireland, 86% of businesses have requested a rent reduction. Of these, 52% need a rent reduction of between 16% and 40% to break even. Despite these figures, the Minister has put the kibosh on legislation to allow for downward rent reviews. As a result, small businesses will face even greater difficulties. It appears this has been done to protect the banks and speculators which own the shopping centres and prime retail streets. The result has been to keep rent yields artificially high. If the Minister was true to his pious assertion that the protection of the real economy was paramount, we would have had late night sittings to pass legislation to allow for downward rent reviews. Such reviews would take pressure off the real businesses providing employment and paying taxes, rather than the speculators who are probably tax fugitives and the bankers whose august organisations continue to exist only because of the intervention of the Government.

The Government should give practical consideration to alternatives to NAMA which would primarily look after the interests of taxpayers, small businesses and those who are about to lose their homes.

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