Joan Burton (Dublin West, Labour)

In terms of the long-term governance of the European Union, I do not think this is the correct way to go. Everybody recognises that the banking debts are special and specific, and we hope that they are one-off and pretty much limited to what is described in the Bill. I am sure that is what the Minister wants and that is what everybody else would like to see. However, EUROSTAT should not permit this fiction. It is either a fiction or a kind of a fraud. The description of the SPV states that it will be a separate legal entity entitled to its own goods and assets in its own right, have autonomy of decision in its day to day operations, be able to incur liabilities on its own behalf and have complete accounting information. The Minister then listed 13 things that the SPV could do.

If the SPV has these powers and is independent, then the Minister made an entirely contradictory statement when he said: "Since the State is guaranteeing the securities issued by the master SPV, the NAMA representatives on the board will maintain a veto over all decisions of the board that could affect the interests of NAMA or of the Irish Government." When he replied to me on the issue the other day, he said: "We are not discussing a special purpose vehicle in a banking context or in the context of NAMA's balance sheet. We are discussing a special purpose vehicle, the purpose of which is to put the entire operation outside our national accounts in the Eurostat statistics." The Minister is trying to persuade us that he has managed to come up with a proposal that tells EUROSTAT that the SPV that does the heavy lifting will have decision making autonomy in respect of its principal functions. The SPV will have majority private sector ownership at 51%. NAMA in the public sector will be able to maintain a veto over all decisions of the SPV in the private sector that could affect the interests of NAMA or of the Government, but the SPV will still be able to have considered decision making autonomy. This is obviously contradictory, and it is where the fiction lies in the fictional statement by EUROSTAT.

The Bill has no provision anywhere for a NAMA group entity that has private sector majority ownership. It is simply not in the Bill. I understand where the Minister's desire to take part in this exercise arises from, but it is an extremely unwise exercise and if it is the preferred method to be adopted by the European Commission, EUROSTAT and the ECB, then it is very foolish.

The issuing of the bonds is currently based on an interest rate of 1%. Interest rates are likely to rise slowly but surely as European economies recover. We hope it will not be much more than a 2% interest rate rise over a period of time. The SPV will make it much more difficult to manage things when it is loss making. It is almost bound to be loss making because of the structure the Minister has put on it once the rates of interest rise. The Minister will say that this is only for a period of time and that we are looking at the long-term ten year life cycle of the SPV. If it is autonomous and loss making, its funding costs will be far higher because it will be going to the bond markets and the formal, legal agency will be issuing the NAMA bonds. Is the Minister saying it is not the formal agency that is issuing the NAMA bonds?

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