Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to speak in the debate on the report of the interdepartmental working group on mortgage arrears. I welcome the report as an input to the general debate. It is in no way a definitive report. It is not intended to be such and it was not set up with that purpose. It was set up with narrow terms of reference to deal with specific issues. I never saw such specific terms of reference. They prescribe the report. The person who wrote the terms of reference could have saved the 22 public servants from meeting during the summer because he or she knew the outcome that was required and could easily have written the report. Nevertheless, the report has been published, regardless of who its authors are and it will make a useful input into dealing with mortgage debt.

The report ignores personal debt and from that perspective it does not deal with the gamut of the problem that exists. I cannot envisage anyone who has a major mortgage debt that does not also have a car loan debt, for example, or other loans such as for education or credit cards. I have yet to meet a person who has all bills up to date including the ESB and telephone and where he or she only has one debt, namely, a mortgage. From that point of view the report is focused on an imaginary situation that does not exist. That said, the report contains useful information and the research carried out provides a useful input into the overall position.

I compliment Mr. Declan Keane, the chairperson of the group, for his work. The only good thing about the report is that it accurately titles itself an interdepartmental group. That is one of the problems. There is nobody outside the public service involved in this particular report and from that point of view it was written from the perspective of people who are in employment. Public servants have suffered pay cuts and are affected by the universal social charge and pension levies but I suspect that everyone involved in the report is in good, permanent State employment. The group was composed of 22 members. They were from the Department of Finance, the Department of Justice and Equality, the Department of Public Expenditure and Reform, the Department of the Environment, Community and Local Government, and the Department of Social Protection. There were three public servants from the Central Bank of Ireland, and also staff from Allied Irish Banks, which is a 99% State-owned company. In my view everyone who works for AIB is a public servant. One member was from the former EBS Building Society which is part of AIB which also makes that person a public servant. It is a public service report written by people, none of whom has lost his or her job or understands the difficulties people face. From that point of view I consider that like any project on the ground this is a desktop report from people at their desks rather than going out and finding out the particular issues on the ground. That said, the report contains useful information.

The scale of the problem is well known and it was well predicted. In January and February 2009 when the worst stages of the recession hit, 30,000 people lost their jobs in each of those months. They were probably the worst two months in the history of the State in terms of job losses. I spoke to people in the banking sector around St. Patrick's Day of that year when 60,000 people had lost their jobs and the live register had increased by that amount who predicted we would have a mortgage crisis by 2011. Thankfully, we have not had that level of increase before or since. It has never happened anywhere in the world that a significant increase in unemployment was not followed, with a two-year time lag, by a mortgage crisis. It was predictable and therefore it is possible that some of this work could have been done earlier to have systems in place to deal with the problem. The timescale was predictable given that it has happened in every other country.

When people lose their job they have a reserve built up and redundancy money which will help them to keep their mortgage on track for a year. Then they may start to fall behind with other bills while trying to keep the mortgage paid but after a few more months things inevitably start to go wrong. That is why we have the scale of numbers currently. Approximately 50,000 households are in arrears for more than 90 days. That is an issue we have to deal with.

I give credit to the group for the important notice on the first or second page of the report which outlines that the group was established to consider 15 specific matters, as approved by the Government's economic management council. However, as is the case with such a review the group has extended beyond the specific approved areas to a certain extent. The 15 matters are set out in appendix 1. The group draws the reader's attention to the significant limitations on its procedures as a result of the specific nature of the terms of reference. The Government drew up a list of 15 questions to which it wanted answers and indicated that it did not wish anything else to be considered. That was disappointing because those people could have produced a better report had it been sought. I compliment the chairman and those who worked on the report because they had restricted terms of reference. The chairman goes out of his way to say that. I compliment him on having the courage to put the important notice to that effect on the first page of the report. Perhaps if he had said that to the Minister he would have been invited to do more detailed work.

The first of the 15 terms of reference is to determine the extent to which the deferred interest scheme is being implemented. That has nothing to do with the future. It relates to the existing deferred interest scheme under the voluntary code. The second of the terms of reference relates to an assessment of the deferred interest scheme criteria. Again, that relates to something that is already in place. The fifth of the terms of reference refers to developing further the concept of trade-down mortgages with the Central Bank and the banks. It was already putting it into people's heads that they want people to consider trading down and getting out of the house in which they live. The group was asked to review what progress has been made on the introduction of insolvency legislation. Reference is also made to dealing with those who have a problem without dealing with those who do not. It was somewhat insensitive of the Minister when he announced this report last week to claim it was intended to help people who have difficulties rather than those who will not pay their mortgages. Everybody has difficulty paying their mortgages but he was almost implying that a large number of people are feigning problems. I recognise that the qualification to which he referred was part of the working group's terms of reference and is embedded in its work. However, the terms of reference also provided for research to be conducted into intergenerational mortgages, such as the Japanese experience of 70 year mortgages. If we are thinking about that route, we have lost the plot. It is bad enough that people have lost their jobs and cannot repay their debts without demanding that their children and grandchildren inherit the debt. The idea used to be that one inherited money, not debt. If the Government introduces intergenerational mortgages, everybody will flee after the funeral in case the will gives them a 35 year mortgage. It was wrong to prescribe that as a specific term of reference.

The working group came back with the idea of a split mortgage, which is like the shared ownership scheme which local authorities have rightly abandoned. The shared ownership scheme allowed people to take a mortgage for 60% of a house and pay rent on the balance. In 30 years time, when the mortgage is cleared, the remaining 40% would be dealt with. That was in effect an intergenerational mortgage unless somebody found a pot of gold at the end of the rainbow and managed to clear the balance of the debt. I have yet to see that happening.

The report discusses increases in mortgage interest relief but, unfortunately, it does not refer to expenditure on rent supplement. We cannot estimate the level of Government support for people in housing or accommodation without considering the wider question of how much is being spent on the mortgage interest supplement and rent supplement. I understand that the Department of Social Protection is providing money for housing and, given that 70,000 are on rent supplement compared to 18,000 on mortgage interest supplement, it is wrong to speak about one while ignoring the other.

The terms of reference were very narrow but, despite the constraints under which the committee operated, it made a useful contribution to the debate. I understand that the Minister for Finance will take questions and answers on the issue. I commend the Government on accepting our Private Members' Bill, the Debt Settlement and Mortgage Resolution Office Bill 2011. As we agreed last night, mortgages cannot be isolated from personal debt. I look forward to debating these issues further during the course of the afternoon.

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