Peter Mathews (Dublin South, Fine Gael)

The expeditious passage of the National Tourism Development Authority (Amendment) Bill by the Minister of State, Deputy Ring, has given me this welcome opportunity to make some observations on the report.

The mortgage arrears problem has been highlighted as perhaps the greatest weight on the people. However, the banks have been slow to admit the scale of the problem. This report does not even address buy-to-let mortgages. Recent commentary by the experts in this field indicates that the provision made by the main banks may fall short of requirements when buy-to-let mortgages are taken into account.

Having made this observation, I will turn to the issue of mortgage arrears that are crushing many mortgage holders, households and families. Two cases as recently as last week come to mind. The debt load on people and businesses - it is not just a question of mortgages - has reached impossible proportions and it is time for the House to get to the core of the problem. If it is underestimated, we will fall short in how we address it.

The combined debt overhanging the economy - households, businesses and the State collectively - is the largest in the world. A report produced by the chief economists of the Bank for International Settlements in late August examined 18 of the developed economies in the OECD, including the world's largest economies, the United States of America, Germany, Japan, the United Kingdom, France, Italy and so on, but it did not bring Ireland within its scope. In the table that was the output of the review, it was not surprising that Japan headed the list with the largest combined debt-to-GDP ratio. In this context, "combined" means household debt, including mortgages, credit cards, term loans and so on, non-financial corporate or business debt, including loans, term loans and so on, plus sovereign debt. Japan's combined figure was 454% of GDP, highlighting the fact that, since 1990, it has struggled without gaining economic growth.

Perhaps because of its size, Ireland was not included in the exercise. Having obtained the relevant figures for the economy - household debt, non-financial corporate debt and sovereign or national debt, which is rising as we draw down the troika loans - they came out at 494% of GNP and approximately 440% of GDP. We would have been top of the table.

Discussing the review now is relevant because the findings of those eminent economists explain that, if economies have combined debt-to-GDP ratios that exceed approximately 300%, the prospect of growth is eliminated, suffocated or whatever word one prefers to use. Notwithstanding the fact that here and there we see occasional reports of optimistic signs in the figures from the Central Statistics Office and other agencies, we must not lose sight of the fact that the country has a massive debt overload. Households and businesses are trying to deleverage, reduce their debts and correct their balance sheets. It is this imperative that will obstruct opportunities for growth in the economy, as it will reduce the desire to spend and boost or stimulate the economy.

While we are achieving notable successes in adjusting the fiscal imbalance, that is, the overspend compared with the revenue the State earns, we are doing it from an impossible starting point. I am not someone who looks for impossibilities. I look to find realities, in this case what we can do. Having been able to ascertain what I have just explained, I would give every encouragement to the Minister for Finance, the Taoiseach and the rest of the Cabinet to press the case with the European Union, particularly the European Central Bank, on the imperative of achieving a debt write-down in order that we can have a fair starting point.

Of the €110 billion owed to the ECB, €70 billion is due because it advanced emergency liquidity loans to our banks, enabling them to redeem in full senior bondholders up to the end of last year and into the beginning of this year. That was not a good idea, right or proper. The issue of provenance of the loans in the banking system owed to the ECB could not have arisen had a proper assessment of loan losses in the system been conducted. This point must be communicated to Chancellor Merkel and President Sarkozy. It must be properly explained persistently and consistently. The Minister and his officials are doing their best behind the scenes in the unfolding crisis, but it needs to be said loud and clear within the hearing of the 16 other members of the eurozone. The losses across the members of the eurozone need to be individually and collectively acknowledged and addressed. A sequential examination is taking place, but it is not addressing and combining the contemporaneous problems.

In recent months a book written by John Mauldin and Jonathan Tepper, The End Game: The End of the Debt SuperCycle and How it Changes Everything, explains the debt "SuperCycle" in the world's developed economies in the past 15 years, particularly in the past decade. It is an important book for anyone to read and it is easy to read. It explains the core origins of the strains being placed on Europe's national economies.

This is the largest financial crisis Europe and the world have faced and it needs to be addressed robustly, openly and honestly. The speculation is that elements of treaty change may be needed to provide for financial re-engineering and restructuring during the coming months. In fact, it will only be a matter of weeks, as this is a crisis. It is in speculating on what might occur that we must know exactly where we lie and what is possible and impossible to achieve. It is no good having conversations and discussions with eurozone leaders who cannot understand our position unless they have expressly stated writing down and restructuring our obligations and the debt of our banks to the ECB and outstanding bondholders in the large banks will be on the agenda.

With that consideration, the position on promissory notes is part of the discussion. It is imperative the scale of loan write-downs in the banking system be addressed because only then will it be possible to arrange the transfer and the proper and orderly restructuring of household debt obligations to the banks. The Keane report raises the problem for consideration but falls short of what is needed in working out the write-downs necessary. There is no point in trying to postpone or delay the working out the loan indebtedness of households to banks. The loans need to be written down to levels that are recoverable and repayable and that will require large write-downs. It will be done on a bespoke, rather than a blanket, basis. If there is an epidemic in a country, one cannot give antibiotics on a blanket basis; each patient presenting with the disease must be addressed. The same applies in the case of financial repairs.

I urge my colleagues, the Minister for Finance and the Taoiseach, to bring this request for recalibration and a loan write-down in the economy to our partners, the leaders of Europe, in order that it can be part of the discussion and the solution to enable our banks to undertake the necessary restructuring of mortgage loan arrears for households and businesses and the buy-to-let sector under the supervision of and with the assistance and encouragement of the Government. A comprehensive solution to this problem must be found.

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