Éamon Ó Cuív (Galway West, Fianna Fail)

I am delighted to have an opportunity to speak on this motion. I compliment Deputy Michael McGrath on tabling the motion. I raised this issue some time ago during Leaders' Questions and the Government has taken no action on this issue. It is fair to say that despite all the promises made this time last year, the Government has significantly failed to do anything practical for people finding it difficult to pay mortgages and loans. I have always been of the belief that what we need is simple action rather than more reports and complicated plans. For people on low incomes who have significantly lost earning power, we need to change the way the mortgage interest supplement works, which we proposed before we left Government. We need to make one very simple change to the rule that one cannot get mortgage interest supplement even if one fulfils the financial criteria for it because one works more than a fixed number of hours per week. It is a nonsense and it is an arbitrary rule which we suggested in a report I left for my successor in the Department be abolished. It was meant to be abolished in the spring of 2011 but it has not been yet.

The effect is quite simple. In many cases, a couple was working - one was in a relatively high paid job and the other was in a low paid job. The high paid job disappeared and the couple is now trying to live on say a clerical officer or executive officer salary. If one stacked up the figures, the couple would be entitled to mortgage interest supplement but for the fact one is in a job. This Government always said it would get rid of poverty traps. This is a simple one, so will it do that?

The second suggestion I have is a very relevant one. It is particularly important to protect the family home where children are involved. If one takes a family home from children, one is talking about moving schools and a huge upset, which will last a lifetime. A very simple way to help families which are working would be say that the cost of the mortgage interest was an allowable deduction when doing the calculations for the family income supplement. Currently, when one applies for family income supplement, one's PRSI, tax and so on is taken off. What I suggest, and what we suggested last Christmas, is that one would take off mortgage interest supplement and when one got down to the core income, one would then compare that to the target income and pay 60% of the difference. In that way, it would particularly target support at families where there are children and irrespective of the make up of the family. This would eliminate another poverty trap because it would make it worth one's while working and it would mean that the minute one started to work, one's mortgage interest supplement would not disappear. It would require a very simple change to social welfare law and it would be of no cost to the Department of Finance, which I will explain in a minute.

How do we make sure we get good value for money? It would be very simple for the Government to say to the banks that it will amend the law - again, we proposed this before we left Government - so that mortgage interest supplement and mortgage interest relief would not be payable unless the banks brought their interest down to a certain maximum limit set by Government by negotiation. Any reasonable bank will know that half a loaf is better than no bread. It would know that if it did not come down to the interest rate pre-agreed and if there was no mortgage interest relief, no payments would be made. One could, therefore, force its hand and one would have the support of the public. We would not implement this until one had literally put it on warning that if it did not move down, one would take action.

The advantage of all of the moves about which I am talking is that first one is only paying mortgage interest supplement. We had proposed last year that we would only pay on the base rate and not on any inflated rate and that one would only pay one's mortgage interest relief on a low rate. That would mean one would save money because one would be giving less relief or less payment. One could use that saving to improve the terms of the mortgage interest supplement and the mortgage interest relief. As well as that, one would ensure more people paid the banks and since we own the banks, there would be much better compliance and in that way, the bad debts of the banks would be less than they are currently. It is, therefore, important that this Government does practical things.

If one brings somebody's weekly payment on a €200,000 mortgage down from €200 per week in interest to €150 in interest by coming half way down to the AIB rate or €112 if one comes the whole way down, do not tell me that is not the difference in many households between viability and non-viability.

I wish to refer briefly to business. I have never seen such a rush to receivership by banks than I have seen in the past few weeks. Every second small business is being put into receivership. The banks, which were so flúirseach with the money a few years ago, are squeezing the life blood out of business. Viable business are starved of cash. I have seen cases of very viable business where small print clauses have been used, that is, the type of clauses where if one nitpicked about it when one was taking the loan, the bank manager said not to worry about it and that it would never be employed. Those kinds of clauses are now being invoked by the banks to try to increase their profits. As has been said by other colleagues, the banks are great at approving the loan but when one tries to draw it down, one gets a dris chasán or a total bramble path in one's way.

The reality is that there is no money out there to do business. As long as there is no money out there, the Exchequer will lose money because there is no business, more people are on the dole and PAYE, PRSI and self-employed tax are not being paid. We are in a vortex currently and the Government seems totally paralysed in terms of doing anything practical about this. It boasted about the pillar banks. These are pillars of salt and they will collapse.

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