John McGuinness (Carlow-Kilkenny, Fianna Fail)

I welcome the Bill and the promise of further legislation in this area in the course of the year. It is essential that we continue to strengthen the banking and financial sectors from a legislative perspective as things change in this country and as we are influenced in the context of that change by outside markets and other countries.

Having listened to what was said in the debate by both Opposition and Government speakers, if we want to be convinced about whether we are influenced or affected by what happens elsewhere in the world we need only look to what happened in Greece yesterday and see how the markets were affected. Trade in Greek banking shares fell by 12% while Bank of Ireland shares fell by 10%. That shows we are in the grip of a global situation and that we are affected by it.

As a small country we need to be in a position to respond to the challenge in a way that is dramatic and radical in order to protect our interests both at home and abroad. In that regard I compliment the Minister for the manner in which he has dedicated himself to the task of ensuring that the necessary change is effected as quickly and efficiently as possible and that it is underpinned by appropriate, strong legislation with the aid of appropriately qualified people such as Professor Patrick Honohan, Mr. Matthew Elderfield and others to ensure that the legislation and regulations are followed. What happened yesterday in terms of the junk status accorded to Greek shares is having an impact around the world especially on Portugal, Spain and this country. In contrast, it was good to hear Mr. John Corrigan outline the fact that while we have to raise €20 billion this year, some €12 billion has already been raised and that there is a cash balance to our credit of €20 billion to give us the time, if necessary, to deal with issues that might arise in the short term.

Yesterday's events also underline the importance of the ratings agencies Standard and Poor's and Moody's and it puts into stark contrast the action we have taken compared with the inaction of other countries. That action has stood to us in terms of our public sector pay bill, the need for reform and the outlining of that reform in the Croke Park deal. It puts at centre stage the efforts of the Government to ensure we have a deal in place and that we are willing to take the necessary measures to reform our financial institutions and the public sector and for the Government to react speedily and do what is required because we are being watched by other economies and those within the European Union. The eurozone is central to everything we do and the protection offered by it through Germany and other larger countries is essential to future job creation, our markets and trade abroad.

It was with some reluctance that I supported NAMA. It came at a time when we were in turmoil. We were looking back at a marketplace that had performed well, created jobs, and given us the appropriate level of taxes to spread equally across society and to help those who were marginalised or dispossessed and needed help and assistance. It was with some disbelief that we considered the activities of the banking sector and how the country, through the activities of one bank in particular, was brought to its knees, and how the tax take, which was affected because of reduced economic activity, dropped to almost €30 billion. That is a lesson for this and future Governments.

I do not mind saying to the public that a certain amount of sorrow and an apology are needed in so far as any of us in this House or in politics generally added in any way to the confusion, lack of regulation or poor decisions. The Minister for Finance has already said this. Having reflected on what happened, there is an onus on Members of Parliament to learn from the past and decide what needs to be done.

There is a lot we can learn from the past. We must examine all that happened in the banking sector. As new figures emerge in the banks, as new appointments are made and as we move the taxpayer to the fore in terms of saving the economy and restructuring and recapitalising the banks, there is a definite need for an open public inquiry into the what happened in the banking system. The Minister for Finance has put in place all the measures necessary to gather independently and analyse all the required information. Committees in the House may examine the reports when compiled. Much more needs to be done, however, particularly because of what we have discovered in Anglo Irish Bank and Irish Nationwide.

The public wants to understand, in layman's language, what happened and to see those who were central to the wrongdoing in the banking institutions brought to court or at least made answerable for what they did. Whatever is necessary to strengthen the bank report, make it public and ensure it is debated by this House or an Oireachtas committee should be done. We must review our projects and the commitments we make. As we introduce new legislation to improve regulation, we must reach out to and try to explain developments to the public, who are quite cynical and sceptical about what we are doing in the House regarding the banks.

As this Bill is debated in the House, there is a need for the Department of Finance to reach beyond the House and explain in layman's language exactly what it is about and what the Oireachtas is attempting to do to ensure the existence of a proper banking structure that is regulated and transparent and which serves the public as it should. The onus is on the Government, Department of Finance and Members of the Oireachtas to ensure the deficit of ordinary information is addressed such that legislation such as this Bill can be understood. That is why it was so important to stop the paying of bonuses to bank officials. It is important that there be a cap on salaries and no further payments of the kind made in Irish Nationwide or Bank of Ireland. In respect of the latter institution, it is important that the money due to the State, €1 million, be seen to be returned to the State rather than anywhere else.

With regard to the boards of the banks, we can report the actions taken by the Minister to ensure board members are appointed in the public interest. It must be said directly to them that they are not appointed just to fill a position but that they have a role to play in the interest of the public. Irrespective of what happens in a bank, be it in terms of salaries, pensions or other actions, it is up to the board members to give voice to the public's opinion such that the public interest will be protected at all times. If board members' positions are to be credible and if the moneys they are being paid to do their job are to represent value for money for the taxpayer, they must be seen to be taking the appropriate action and scrutinising each transaction within the banks to ensure we are on the right track in terms of regulation and accountancy.

We must also consider the need to convince the public, particularly the business sector, that as we legislate in this area, but not just in this Bill, the banks will be open for ordinary business. The Minister addressed this during Question Time. It is essential that the banks be open for ordinary business if public confidence is to be inspired and if we are to convince people outside this House that we are acting in their interest.

This Bill and what is being achieved will strengthen the whole banking sector. It will show people abroad involved with markets that affect this country that we are going about our business and determined to get it right, regardless of the pain. This is essential. There is a need to convince businesses in this country, which remain unconvinced, that the banking sector will be open for business and available to assist with the establishment and growth of businesses. The sector must ensure businesses, some of which are customers of the major banks, that if they, the businesses, are in trouble, there will be a way out for them. Just as we are seen to use taxpayers' money to bail out the banks, it should be seen that money will be readily available in the banks for businesses, including small businesses and farms, that need assistance. There is no evidence of this yet.

We need to use some of the existing agencies. The Minister for Finance mentioned Enterprise Ireland. I have great respect for the work it does with Irish companies at home and abroad to ensure we can gain access to the various markets that will be so necessary to achieving essential export-led growth. There is a fund to help the export sector.

Instead of decreasing the money allocated to county enterprise boards, we should not only be increasing it but also ensuring, perhaps through the National Treasury Management Agency, that €0.5 billion or €1 billion will be made available to the boards so they will be in a position to offer small companies short-term soft loans to help them surmount particular problems, diversity, expand or sustain existing employment levels. This is essential and involves the sensible use of the 35 different boards. We need to consider this. It is fine to focus on the work on the banks, much of which we have done, but we now need to work more with the SME sector throughout the country.

The credit unions were mentioned, as was the effort they are making to fund small businesses and ensure they have sufficient working capital. This work needs to be supported by the Government.

The other area that concerns me as we finance and recapitalise the banks is the discussion on mortgage holders. A growing number are facing the threat of repossession and court action. We need to ensure that the banks will offer them interest-only loans for a given period and extend their overall mortgage repayment periods. We must also consider the repayment of the capital and how the banks respond thereto. We need to ensure the banks are giving the same assistance to the affected individuals as we are giving to the banking sector.

In this House, we need to look radically at how we will regulate the sub-prime market. The majority of houses under threat of repossession are associated with the sub-prime market. I will not say that people were encouraged in those years of the boom, but they wanted to be like everybody else, in spite of not having the income, perhaps, to own their own house. The only option for them was the sub-prime market. Many houses are now in negative equity and these people are in the area of sub-prime. We need to do something about them, not to ignore them but to include them in some way as regards how that whole area may be regulated, to ensure they have homes for the future. As they fall into arrears and are not recognised within the banking sector, they have not got any rights if the house is dispossessed, to go back into the local authority sector. Therefore we need to do something for them to ensure that this happens.

The last appeal I would make to the Minister is beyond the area of Enterprise Ireland, the county enterprise boards and the credit unions. It is something the Government can do itself in regard, for example, to the hospitality or retail sector. We need to be radical in terms of how we fund local authorities or allow them to fund themselves. We need to reduce the burden of over-stated commercial rates. If a Bill is being considered in the future in regard to the financial area, such as the present legislation, then we should extend our consideration beyond the obstacle of local government funding towards ensuring that commercial rates are dramatically reduced.

Only last week I met a group of people who are being subjected to the upward only rent review process, which is a serious problem for properties quite close to Leinster House. I see no reason why the institutions, some of which we are supporting, cannot be influenced into giving a break to their tenants and reduce the rent downwards to where it should be relative to property valuations in the marketplace today. That is essential across the country and in most cases it will be found that while individual landlords will reduce the rent, the institutions and those people who own major properties are simply sticking to the upward only rent review process. That is neither acceptable or sustainable because people who are in these properties will not be able to continue to give the level of employment they do since they do not have the turnover necessary either to pay the bills, expand the business or even sometimes pay the rent. In some cases the rent could be equivalent to 14% of turnover and that is not sustainable.

I would ask, through the Department of Finance, because it is dealing with the larger banks that issues such as this should be considered. It should not be afraid to bring the discussion beyond recapitalisation and take it into the other areas, which although peripheral, are essential to the economic development and sustainability of jobs throughout the country.

If we had to be convinced by the actions of this Government and what was necessary, yesterday's happenings in Greece and in the money markets should convince anyone that this is what Ireland needs to do. This is the path we need to be on and we need to take radical steps and not be afraid to overhaul the status quo and ensure we have policies that are fit for purpose in the future.

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