Peter Mathews (Dublin South, Fine Gael)

Like Deputy Paschal Donohoe I commend the proposers of the motion and agree with their analysis but it falls short in terms of solutions.

An example occurred during the week that I would like to share with Members that explains at a microcosm level, and can be extrapolated to the national level, the terrible bind the country is in with the legacy debt for households, the banks and the country. In early 2007 a public servant who is now aged 50 sold a house and realised €100,000 of equity in that house which they invested in a new house in a provincial town. That new house cost €420,000. That was a prudential level of equity investment in the new house in early 2007. This person has worked in the public service all their working life and four years ago, at 46 years of age, they made this second home investment. A total of €320,000 was borrowed from a building society which is now a bank and a 21 year loan entered into for €320,000. Prudentially, a five year interest only fixed rate of interest of 5.5% - that was before European Central Bank interest rates fell - involved a €1,480 monthly repayment commitment. That was fine. It was prudential. There was nothing wrong with that but because of the collapse as a result of total mismanagement of the banking and financial sector and the economy, and the way the finances were organised up to that point, the position now is that that public servant has experienced a huge drop in net take home pay in the order of 20%. The €1,850 monthly repayment for the loan on the house was not possible within the income constraints. That person took the initiative with the bank because the banks were operationally under strain and not working according to the normal banking operational levels as a result of the collapse. That person suggested that €1,000 a month would be the new monthly commitment. That happened for 12 months but, weirdly, at the end of that period the bank wrote to say that the difference between the €1,480 and €1,000 monthly payments for the last 12 months must be met. It presented a statement invoice for €6,000 odd, which did not make sense. The real hammer blow, however, is that the house, which cost €420,000, now has a realistic market value of about €200,000. That means the €100,000 investment by that good public servant is gone and they have a debt of €320,000 on their home worth €200,000. That is the shock of the debt burden on this country, which is replicated all over the place, including businesses.

This is not something that occurred in the last 40 days, however. It is something we have had to describe, within that period and against the background of a straitjacket, to get this country's fiscal accounts in order, which has included the revenue-generating elements, the jobs, and which has had to be within the constraints of being revenue neutral, along with all these other difficulties. I invite Members of the Opposition to be understanding, co-operative and supportive in this respect. The EU-IMF report on the first two quarters is like the first nine holes on a golf card. We should not judge it until some more unfolds. We must continue to present the true facts across all levels to achieve debt resolution, especially with our counterparts in Europe.

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