Clare Daly (Dublin North, Socialist Party)

It is not a secret that the Keane report has come as a bitter disappointment to the hundreds of thousands of individuals who are being crucified under the burden of mortgage debt. I refer to those who are included in the statistics and others who are juggling expenses and bills as they try to hold their heads above water and ensure their properties do not go into arrears. The first step to be taken in addressing a problem is to quantify its scale and the first flaw in the Keane report is its failure to do so. Unless one understands the scale of a problem, one cannot address it. The Keane report consciously sets out grossly to understate the scale of the mortgage crisis. The figures cited indicate 45,000 households are in arrears of nine months or more. We have also heard that between 7% and 11% of the mortgage book is in trouble. From where do these figures come? They were provided by the banks, the source of many of the problems with which we are grappling and for this reason they cannot be considered reliable.

The sub-prime lenders have generally been excluded from the figures. These are the companies which preyed on the most vulnerable and hard-pressed citizens. In January 2011, for example, Start Mortgages had arrears on approximately 40% of the loans in its mortgage book. This figure is far in excess of the figures cited in the Keane report. The fact that 55,000 households are deemed to hold restructured mortgages is cited as if the problem had been somehow solved. We all know that many of these 55,000 cases amount to little more than dressing up the problem. Applying an interest only arrangement for six months buries the problem and it will re-emerge when the six month period has elapsed.

Our starting point must be to accept that mortgage debt is a massive problem, which extends far beyond 100,000 households. Hundreds of thousands of people are affected even on the basis of this figure. The problem will not be addressed by the measures proposed in the Keane report and the fact that the Irish Banking Federation was the only organisation to welcome it tells its own story. The report is more to do with the interests of the banks than those of homeowners. As others have stated, many of the groups working at the coalface providing assistance to homeowners believe their views and the valid submissions they made to the process have not been taken on board. The report has suffered greatly as a result and is simply not good enough.

Having initially indicated that the Keane report would provide a solution, the Government is now presenting it as some form of discussion document. This issue cannot be allowed to rest as to leave matters as they are would store up massive problems, not only for the individuals affected but for society as a whole. As Deputies are aware, it is difficult for someone who is having mortgage difficulties to acknowledge the problems with which they are grappling because they view them as personal. We must acknowledge that the problem of mortgage debt is one for society. In addition to the consequences this debt has for individuals, failure to address it will hold back the economy for decades in a Japanese type period of stagnation. Ireland is already the most indebted country per capita . A solution to our economic problems will not be found until we address the crippling debt under which people are burdened.

The starting point must be to keep people in their homes. Apart from the obvious benefits to the individuals in question, the economic and social cost of any failure to keep people in their homes would be immense. We cannot have any more cases of banks repossessing family homes and seeking to sell them for a price below what the mortgage holder could have afforded to pay. Homeowners and their families have been moved out of their communities and forced into bankruptcy at a cost to the State of tens of thousands of euro in rent supplement and social welfare payments. Those days must be consigned to the past. People must be allowed to remain in their homes.

As an absolute minimum, we must adopt the idea put forward by a number of groups, including New Beginning, that repayments be based on 35% of net disposable income. This is the only logical and sustainable debt repayment figure. Splitting the mortgage and warehousing a section of it, while an important idea, must not involve interest being applied to the warehoused element. Where else would one be presented with the scenario outlined in the Keane report under which the banks would continue to receive interest on warehoused parts of mortgages and ultimately receive more money for them than they would have received if the original mortgage agreement had remained in place? This is a ludicrous proposal given the background to this issue.

The main question is what will happen to the part of the property which does not relate to its current value. Without a debt write-down, we will not find a way out of the crisis. It is completely wrong to use the term "debt forgiveness" as if homeowners are a type of criminal. The owners of family homes, as opposed to trophy homes, buy-to-let or second, third or fourth properties, are victims of the crisis. The only argument made against the idea of a debt write-down in the current circumstances is that it would cost the banks more money, which is, of course, true. If it does not cost the banks more money it will cost the home owners more money. They do not have it so the banks will not get it in any case. We must start by recognising that reality.

I fully support the need to have a general write-down of all properties in negative equity. People who purchased their homes between 2003 and 2007 paid an uneconomic price in a false market. They were scandalously ripped off because the houses were not worth the prices paid. For those people, their children or their grandchildren, carrying that debt for decades is unsustainable and will cripple this economy into the future. As was noted, the banks have already been given between €10 billion and €14 billion to absorb some of these costs. Twenty-nine billion euro was pumped into Anglo Irish Bank to absorb its problems. We must also look at what was done for NAMA and the big developers here. Billions of euros of loans for private individuals have effectively been parked. Figures were given out showing that 180 individuals had loans of €62 billion. The write-down of those debts has cost the banks - namely, the taxpayer - €36 billion in bank losses. That private debt was transferred to the banks. The very least that home owners deserve is the same treatment. Unlike some of the speculators, who fuelled the economic crisis for which we are all now paying the price, home owners were always only victims in this situation into which they were encouraged and cajoled by banks and the establishment. This is the only way to act and it must be done for all properties, not only those with regard to which people are currently struggling.

The argument has been made that because the taxpayer now owns the banks the debt will be transferred to the taxpayer. However, we already paid that hit and the bondholders should take this one. It should not be transferred to the taxpayer. A key part of the problem for the Government in regard to this report is that it does not recognise reality. The money is lost in any case. These debts are unsustainable and people cannot afford to pay them

Some other aspects of the report need to be addressed and should be referred to, briefly. The report mentions 100 extra advisers who are to enter a new set-up. A point was made by MABS, with which I agree. Why is this new arm not linked to the MABS structure? MABS is clearly under significant pressure and needs extra resources. Crucially, it also needs legislative support to back up the positions it takes. Why is its role as an independent adviser to homeowners not being enhanced rather than have an extra 100 advisers placed under a new guise, umbrella, quango, or whatever? It does not make any sense. We should tap into the expertise already in place. More than anything, this shows the urgent need to bring forward the legislation on personal debt and bankruptcy. There is now a virtual cottage industry of companies that entice people to register in Britain, declaring themselves bankrupt in that country. These companies extort thousands of euros from people for a process that costs £500 for registration. We must address that anomaly and introduce legislation akin to the British system which allows people to start again after a year.

This report cannot be the end of this discussion. It is a completely inadequate answer. In his better moments, the Minister of State, Deputy Penrose, would probably acknowledge this. The real question is the next step in dealing with this issue. The Keane Report is not that.

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