Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

I am pleased to contribute to this historically important debate on the Bill to establish the National Asset Management Agency. I add my name to those who have already commended the Minister for Finance on publishing this legislation. I cannot think of a more important item of legislation to come before the House and, given the circumstances that created the need for this Bill, I hope that nothing of this magnitude need ever appear before the House in the future.

The scale of the difficulties the Minister and the Government are seeking to overcome might appear daunting and intractable but anyone who reads the Bill will quickly see how clear-headed and straightforward is the approach of the Minister. This is one of the great strengths of the Bill and the overall approach to securing the future stability of the Irish banking system and allowing the lifeblood of any economy, the flow of credit to businesses and households, to flow.

From a housing perspective, particularly in terms of social housing, I see enormous potential for real and meaningful synergy between what NAMA will do and what my Department is already doing. For some time, the social housing investment programme has been undergoing a significant restructuring to shift the focus increasingly towards long-term leasing arrangements, with lesser reliance on construction and acquisition. I have initiated this restructuring for a number of reasons. If we are to cater for the range of social housing needs that exist at different stages of the life cycle, a uniform social housing stock does not fit the bill. We need a flexible system of graduated supports that can be adapted to cater from differing needs of different households throughout various stages of the life cycle. It must also be capable of taking account of the changing circumstances, for better and for worse, of a particular household over time rather than focusing and permanently defining need by reference to a point in time snapshot. As part of that, we must accept that the most appropriate response to social housing needs is not always the provision of a physical social housing unit for life.

The approach I am taking is also a reflection of the new reality in the property market. While demand in the housing market acted like an on-off button, dropping off rapidly, the supply side was more like a cooling oven, slower to respond to the change in market conditions. The result is a considerable oversupply of housing available for occupation around the country. Estimates of the overhang range from 35,000 units at the low end to well over 100,000 at the upper end, depending on how one defines the issue. The most recent full assessment of social housing need in March 2008 indicated there were more than 56,000 households on local authority waiting lists in need of housing. It is likely this figure has increased in the meantime. Even if we were operating in a resource rich environment, it would make eminent sense to endeavour to match up these existing unsold units, of the right type in the right location that meet the sustainable community agenda, with existing demands rather than add further to the housing stock to meet needs through construction programmes that will take time to deliver. However we are not in a resource-rich environment. Therefore a move away from the tried and tested build or buy approach is driven by necessity. Were we to stick to construction and acquisition programmes to meet social housing need we could not hope to make any meaningful inroads into existing need.

By contrast, through careful management of the programme and by taking advantage of the value in the market, the long-term leasing schemes I introduced will enable us to continue the momentum built up in recent years in meeting the needs of record numbers of households. Last month I launched a further strand to the long-term leasing initiative that will enable the Government to tap into the dynamism and expertise of the voluntary housing sector. This new approach will allow voluntary bodies to enter into agreements with developers or landlords interested in leasing units on a long-term basis and also to engage directly with the lending institutions with a view to acquiring homes that will be leased for social housing purposes. This innovation has the potential to transform the landscape of social housing provision in Ireland.

Direct lending by banks to voluntary housing bodies for such purposes with the leasing income stream as a means for servicing borrowings is a further example of clear-eyed alignment of the Government's social and economic objectives. Banks get to return to prudent and responsible lending, using the flow of credit to the economy, and the funding advanced means that the housing needs of disadvantaged households can be met. From the perspective of the voluntary and corporate housing sector, this initiative will enable it to have less reliance on Exchequer support, making the sector stronger and more dynamic. It will further cement the partnership between the sector, the State and local authorities in delivering this crucially important aspect of social policy.

This is happening even in advance of the formal establishment of NAMA. My Department is finalising the terms of an agreement between the Irish Banking Federation, the County and City Managers Association and the Irish Council for Social Housing, setting out a shared understanding of each party's potential role in progressing the long-term leasing initiative. At the moment several voluntary housing bodies are advancing proposals with various financial institutions that could see units delivered very quickly.

Once NAMA is established and loans transfer across with properties attached, my Department will step up engagement with the team. This engagement has been under way for some months and I have met with representatives of NAMA as we seek to extract the maximum social dividend from the overall process by providing a return on residential units suitable for long-term leasing purposes. The interim NAMA team has already met with some voluntary housing bodies. I welcome this direct contact and hope the relationship continues to be fruitful for NAMA, the voluntary housing sector and my Department.

The approaches I have outlined and the clear synergies with the role of NAMA point to a considerable social dividend that will be delivered from the Government's overall efforts to restore the public finances and our banking system to health. We are acutely aware of what is being asked of the taxpayer. I welcome the safeguards in the NAMA Bill and the proposed inclusion of a loss levy.

In parallel with NAMA, our focus is on maintaining or restoring the financial well-being of individual households and addressing issues of debt. The new programme for Government sets out commitments on debt enforcement and support for distressed mortgage holders to expand and make more flexible options available from lenders and borrowers in dealing with debt situations. Notwithstanding the extremely low rate of possession in Ireland by international standards, it is important that the full range of mechanisms is available for fair and compassionate resolution of debt management problems.

I conclude by commending this Bill and by complimenting the Minister and his officials on their hard work and clear vision. I look forward to working with NAMA and to continuing the efforts of my Department to deal proactively with the new circumstances in the residential property market, seeking to make economic necessity and social need work in tandem.

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