Joe Carey (Clare, Fine Gael)

One needs to regard the proposed administration and day-to-day operation of NAMA as fundamentally flawed. Those who were proportionally most responsible for creating this financial mess are now at the forefront in navigating the economy into clear waters. Once again, it stretches the Government's credibility to breaking point to believe those who have made such a mess of things should continue to have their hands on the levers of power. This is becoming a sick Irish cliché - absolutely no accountability and no responsibility, an Alice in Wonderland system of government.

An important consideration in planning for the future of the economy must be a proper review of why this occurred and why it was allowed to occur. An inquiry has been mooted by many, including Mr. Colm McCarthy. The Minister for Finance seemed open to the idea, although he was never particularly enthusiastic about or seemingly driven by it, aside from his recent public admission that he shared the public's frustration at the apparent ease with which bankers were circumventing the legal process. There is a good precedent, namely, that set by the late Deputy Jim Mitchell's Oireachtas committee inquiry into the DIRT scandal. The House has the tools to carry out this work. The legislation should create an independent inquiry under the jurisdiction of the Oireachtas to investigate what went on in the banking sector. Such an inquiry would offer the Minister the opportunity, even at this late stage, to retrospectively bring an end to the practice whereby the banking tail wags the economic dog.

In his presentation of NAMA the Minister relies on assumptions for his proposal to work. His figures stand and fall on the assumption that we have reached the bottom of the decline in value in the property market. I appreciate that this must be done but there are so many variables in his conclusion that we cannot be sure he has called it correctly. I fail to understand the formula he and his officials applied in arriving at their conclusion in terms of market value. It begs the question of how comprehensive and wide-ranging is their analysis.

The Minister has made much of merely requiring a 10% increase in property values to allow NAMA to break even. This is all fine and it achieved the headlines it set out to grab, but it is missing the full story. If the Minister is wrong in saying we have reached the bottom of the market, the climb to break even for NAMA will be steeper and consequently cost the taxpayer even more. The rigour of his analysis must be compromised by the oversupply of properties. Recent reports show that we have enough land zoned to cater for the needs of generations. The Minister need only drive through any constituency to check the availability of commercial space and land zoned residential.

The supply side of the equation is more than catered for, but the demand side has been badly wounded. The aim of all of the Government's actions since the last budget has been to quench demand in the economy. The increase in VAT, the fact that the only costs which are rising in the inflation index are those associated with public services, income levies and many other factors will become more significant as we navigate our way out of recession. Demand and spending as economic tools are and will become important parts of NAMA. The current level of commercial rents is untenable. I have no doubt that retail outlets will become part of NAMA-controlled properties. Sales have collapsed around the country and the level of unemployment in the retail sector has soared. However, rents fixed at the height of the property bubble remain the norm.

NAMA will not solve the crisis in access to credit. The economy simply cannot recover without a functioning banking system but NAMA will do little to ensure credit will flow. Credit is the lifeblood of business which keeps it ticking. This has been the most important issue facing every small and medium-sized business for the past 18 months, yet the Government has failed to tackle the problem. Jobs are being lost daily because of the banks' inflexibility. Confidence in the economy will not recover without access to credit.

NAMA is being proposed as the solution. Yes, it will give financial institutions access to extra funding from the European Central Bank, but as Mr. Colm McCarthy and Professor Patrick Honohan have stated, there will be no guarantee that this extra funding will be used to finance additional lending in the economy. The four main banks alone are indebted to other non-Irish credit institutions to the tune of €140 billion. With NAMA, there will be no obligation on banks to lend money. Their only obligation will be to service these expensive loans. Therefore, there is no guarantee that the credit for which businesses have been screaming for the past 18 months will be provided.

Fine Gael has proposed the establishment of a national recovery bank. There would be many advantages in creating such a bank instead of NAMA, the greatest being that new State funding for the banks would ensure almost immediate lending in the economy. Our model would ensure the taxpayer would be purchasing higher quality loans, as opposed to the highly questionable toxic developer loans being acquired under NAMA. A national recovery bank could be up and running in a few weeks. The national recovery model has been introduced in France where it has been highly successful, as evidenced by the encouraging signs emerging in the French economy. The good bank proposal would be the most effective, quickest and fairest way to get credit flowing again. Even if NAMA goes ahead, we should still establish a national recovery bank to provide for the economy's credit needs.

Any economic recovery will be based on confidence, but the NAMA proposal does not inspire confidence. There has been the expected spin on the whole process since publication of the Bill, indicating it is "the only show in town" and "the best option of a bad lot". The Government has attempted to rubbish other potential solutions with its ideological attachment to protecting those with whom it has been so closely associated during the past 12 years.

The Government has obviously studied the approach adopted in the United States to the economic crisis during the past 12 months. The Minister would do well to heed the words of Mr. Larry Summers, director of the US National Economic Council and top economic adviser to President Obama. As president of Harvard in 2006, he told his students, "Be mindful of those threats that come from elevating the value of consensus, conformity and comfort above the value of truth." It is impossible to accept that this legislation is based on the truth and I look forward to voting against it tomorrow evening.

See this speech in context