Paudie Coffey (Waterford, Fine Gael)

For us to learn how we reached this devastating set of economic circumstances, we must examine the reasons for the economic collapse, including the roles of the Government, the regulator and the banks. The previous Government implemented unsustainable economic policies and propagated the property market until the running of our society was dependent on taxes derived from people selling property to one another. There was also a lack of oversight and regulation of the banking sector.

We must be aware of the role of the banks and mortgage advisers in selling mortgage products to many members of the unsuspecting public. Unbridled and loose lending practices saw debt loaded onto families - 100% mortgages, lax contracts and next generation guarantees made by older generations to subvent mortgages. The result is a total economic collapse, leading to a loss of jobs and income, negative equity, mortgage distress and personal indebtedness.

In contrast with the 1980s, which saw the last recession and unemployment crisis, Ireland now has high levels of personal and business indebtedness. People undertook remortgages to upgrade and extend houses and to buy second properties and foreign properties. Hotels were packed by market shows every Sunday. This was a sign that the situation was getting out of control. The Minister of State with responsibility for small business, Deputy Perry, is present. The saddest aspect is that many small businesses have been mortgaged to acquire loans. What were perfectly viable businesses are under pressure thanks to some of the property deals in which they were involved.

There is no silver bullet or magic wand solution. People's expectations need to be handled with care. It would be dangerous of the Government to give people the expectation that it will pay their mortgage debts. However, we must do everything in our power to assist people in mortgage distress. The Government has been left with a monumental mess by the previous Administration.

The Keane report is a welcome start to the work, but it is not a solution to everything. Its main point is on the appointment of professional, qualified advisers and experts to assist families in mortgage distress. They must work closely with the Money Advice and Budgeting Service, MABS, which has considerable experience in this regard. I understand the Minister for Finance must give the exact detail of whether they will be located regionally or on a county-by-county basis. MABS will operate some type of referral system. MABS does not deal with mortgage distress alone - it also deals with personal indebtedness and unsecured loans, for example, credit cards and term, car, credit union and moneylender loans. It is important that the advisers work closely with MABS and use a referral system.

I call on the Minister to ensure good regulation is applied to moneylenders and so-called independent money advisers, many of whom are former bankers peddling their wares. After contributing to the problem, they have reinvented themselves as money advisers for the same distressed people. I ask the Minister of State and his officials to note my point.

I commend a recent MABS report, Lifting the Load, an initiative of the Waterford office. The report identified three categories of people in mortgage distress. The short-term risk category refers to those who, for example, have lost their jobs temporarily and have fallen into arrears. Mortgage supplement and mortgage restructuring is helping them as well as those in the medium-term risk category. The signs indicate that Ireland sees fewer repossessions than the UK and other jurisdictions do. If possible, we do not want there to be any repossession. The long-term risk category refers to people who have no ability to repay their mortgages. The Keane report's mortgage-to-rent solution can be of assistance to them. However, I note a suggestion made by MABS, that is, if a house is purchased by a housing agency or local authority, the balance of the mortgage that remains due should be written down or another provision should be made so that the burden does not continue on to the family. This would give the family an incentive to continue renting that house. The Minister should examine the MABS report on this matter. The Minister for Social Protection is aware of it, seeing as how she launched it.

The Government, every Deputy and every part of society has a role to play in getting through this disastrous recession. The banks must play their part and pay their way. I welcome that they must pay for the expert advisers. They must also show genuine forbearance towards distressed families and provide every avenue possible to restructure their mortgages, help them through the recession and allow them to stay in their homes.

I welcome the Government's initiative and the report. The details need to be worked out. I also welcome the recent intervention of the Financial Regulator when he warned the banks to stop hiking interest rates and to give people a chance. A wider economic solution and the restoration of confidence, growth and jobs will get us through this crisis. We must all put our shoulders to the wheel, help those who are most in need and learn from the past to prevent a similar crisis recurring.

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