Jim O'Keeffe (Cork South West, Fine Gael)

Let me outline Fine Gael's central concern about NAMA. I have not said "NAMA, no way" but believe NAMA, as presented by the Government, is exposing the taxpayer far too much. At all times my efforts have been to try to convince the Government on that central issue, namely the value. There are two aspects to the value, the question of what is current market value and the new airy fairy concept that has been introduced of the long-term economic value, the over the rainbow value. It is clear that there are problems in getting true market value on those assets.

I question the methodology employed in reaching the estimated figure of €47 billion that has been mooted. On previous occasions I have questioned values that have been presented by the Government. The Minister of State, Deputy Peter Power, will recall the views I expressed on Thornton Hall. At that time I was asked to accept a valuation of €200,000 an acre by the then Minister for Justice, Equality and Law Reform, a senior counsel and man of high standing, but one who did not have a clue about market values. My view at the time was that the market value was approximately €25,000 an acre. That view was independently confirmed at perhaps not quite as low as €25,000 an acre but almost as low.

I do not accept the methodology nor the approach that is being adopted on the figures that are being presented. Even on the basis of the methodology that is being presented the taxpayer is overexposed and essentially overpaying. Reference has been made to the prospective rental incomes as forming a basis for the methodology, but in a lot of properties there will be no rental income. I question that approach. Even on the basis of market value there are questions to be asked.

In a commentary on NAMA The Economist states it will still be paying approximately €7 billion more than the assets are worth, that is, even accepting the Government approach. On that basis, we are out by €7 billion already. Having questioned that, we then come to the airy fairy notion of the long-term economic value. I do not accept it. I have practised law for longer than the Minister of State, Deputy Peter Power, dealing with market values for farms, houses, pubs and properties over many years. The market value is what a willing buyer is prepared to give to a willing seller. What we have devised here is an artificial construct, added on with a superstructure of long-term economic value, which is pure hope value. It is the wrong approach, as it overexposes the taxpayer.

The Minister, directly or indirectly, accepts there is an overpayment but his position is that if we do not overpay, we will ultimately pay more because the money we will have put into the banks to capitalise them will cost us more. In other words, according to the Minister, the taxpayer will be paying 4% at current rates for money that will be used for capitalisation as opposed to 1.5% currently for the NAMA money. That is a wrong approach on the part of the Minister from two points of view. He is comparing short-term money, three-month money, which will undoubtedly go up, to three to five-year money, which costs 4%. He is comparing financial apples to financial oranges. It is not a proper comparison.

The Minister might well ask what is the alternative. Again, I have consistently held the view that there is one. I do not accept the approach of immediate nationalisation. That would be a disaster. However, there is an approach that could provide the answer, namely, to force the banks to capitalise themselves at a low figure, let us say a 50 cent a share and let the State underwrite that. Two things will happen if the banks were forced to get in their rights issue at 50 cent a share. There would be a very big take-up but it would do nothing for the existing share price. Tough luck. I am sorry if people have been speculating on the price of the banks since they went up from 13 cent to 15 cent. That is their tough luck. The second thing that would happen is that if the State had to take up its underwriting obligation at 50 cent a share, the taxpayer would ultimately gain substantially when the banks' share price went up. That is the answer. I am not presenting that off the top of my head. I have discussed it with many people involved in the banking and business sectors and they tell me it is a realistic approach. There is no guarantee the Minister will accept that option even though I have pressed it with him on a few occasions.

The current approach that is being adopted is the wrong one from the point of view of money, as it is overexposing the taxpayer. As a consequence, the taxpayer will have cause to rue the day that the Minister completed the approach to NAMA as currently presented. There is still time to pull back from the brink. That is the last appeal I will make on the issue, publicly at any rate, to follow something along the lines I have been suggesting, but not to continue with the crazy approach of overpayment, which is still central to the Government approach on the Bill.

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