Séamus Kirk (Louth, Fianna Fail)

I wish to share my time with Deputy Sean Fleming.

I am thankful for the opportunity to contribute on this important Bill, one of the most important to have come before this House for some time. It aims to amend Ireland's antiquated bankruptcy laws. That we are using the phrase "antiquated bankruptcy laws" while welcoming the Bill is telling. Perhaps the devil in the detail will be teased out when we reach Committee Stage. None the less, the Bill serves as recognition of the serious difficulties many individuals and businesses face at present.

That we are using the phrase "antiquated bankruptcy laws" indicates this is a legislative area that did not have to be addressed previously. When we entered the euro area in 2002, the regulatory framework that should have been an essential ingredient was not in place. Consequently, we face our current dilemma, with relatively cheap credit being available both here and in other member states.

Let us compare our regulatory framework with that in the United States. In the dollar area, where the Federal Reserve effectively controls matters, there is also a very significant sovereign debt issue. It has been suggested recently that the per capita sovereign debt level in the United States may be higher than that in the eurozone. The absence of a regulatory framework led to lending delinquency on the part of financial institutions, particularly in Ireland. This has caused the problems we face today.

There are European jurisdictions outside the euro area that experienced property bubbles and financial difficulties. It is important to remember that they dealt with them over time such that they experienced economic recovery, albeit slow. Clearly, therefore, there are grounds for optimism and hope. If this Bill works for those who are directly affected by it, it will help to establish the foundations of the economic recovery we all wish to see. I sincerely hope it will be successful because many people are affected by mortgage, business and personal debt. Members have outlined the exact problems being experienced by their constituents.

Fianna Fáil introduced a number of Private Members' Bills recently. It may be useful for the House and people in general to consider these proposals. There was family home legislation, regulation of debt management advisers legislation and the debt settlement and mortgage resolution office legislation. It is a great pity the Government did not examine more closely the proposed concept of the debt settlement and mortgage resolution office and its basic structures. It offered genuine prospects of tackling the problem.

A process of arbitration is needed. Personal insolvency practitioners will be between the individual borrower and the financial institution. We need to have a non-statutory arbitration arrangement. Our proposal on the debt settlement and mortgage resolution office met this requirement adequately. It is a pity the Government has not embraced it and incorporated it into the legislation.

Let us consider some of the proposals Fianna Fáil made: interest-only payments for up to four years; extending the period of the mortgage by up to 20 years; a repayment holiday for up to 12 months; an adjustment to the interest rate to bring it in line with market rates; a debt-for-equity swap; participation in the deferred interest scheme; in the event of voluntary surrender, that the financial institution lease the family home to the borrower at a market rent in particular circumstances; and the establishment of a debt enforcement office to oversee the implementation of debt enforcement procedures nationally.

The reality is that personal debt is a major challenge economically. Unless we can address this satisfactorily and adequately, it will remain an albatross around the neck of the national economy and slow the process of economic recovery. In every community, people know individuals who have mortgage debt and personal debt. While sympathy on its own is fine, many individuals need assistance as they are financially stressed dealing with their mortgage repayment challenges and problems.

The old meitheal principle stood people in very good stead in rural areas. An amendment to the taxation system should be considered to allow family members to help one another out, if only temporarily, in order to get through a difficult period with mortgage or debt repayments. This should be reflected in their tax allowances. Apparently there is a difficulty with this, which is a great pity because, ultimately, we must think about community and family. Family members may be in a position to help out.

In parallel, economists state there is a significant savings level. There is an inevitability about that. People are concerned that the rain day is just around the corner for themselves and feel the need to squirrel away all spare resources that previously were spent in the local economy. We lament now that the consequent impact of the stimulation, development and contraction has been a considerable loss of employment. The jobs are not being created because on one level there may be too much saving being done whereas on another level there is a significant problem with personal, mortgage and business debt.

All in all, we as a party welcome the Bill even though it contains significant inadequacies. I do not know how disposed the Minister will be to accept amendments from this side of the House when we get to Committee Stage but I sincerely hope he will be willing to do so. Of any legislation that has come before the House, there is a consensus on and good will towards the Bill and a realisation it is urgently needed and that we need to be responsible about it. We need to get it on the Statute Book so that it may be implemented as quickly as possible.

The Bill provides for personal insolvency practitioners and I am sure there will be significant interest in these appointments. It is important that dependable trustworthy individuals get those appointments, licence arrangement or whatever it might be. There may well have been persons who were involved in decisions on indiscriminate lending to those who now find themselves in trouble. It would be important we draw a distinction in order that those who receive these appointments will reflect common sense, understand the needs of the distressed borrower and also understand the needs of the credit institutions.

At a time when the taxpayer has put a great deal of money into the banks, it is important the banks realise they have a responsibility in all of this. There may well be the seriously distressed circumstances where individual borrowings are at such a level that recovery, as we all would like to see, where persons can return to their position prior to our financial difficulties, is not possible. Like every other problem, there will be degrees of distress and I hope this legislation will be able to take account of those degrees of distress.

At the end of the day, everybody who has borrowings, severe or otherwise, are members of the community in Ireland. We must have sympathetic consideration of their individual circumstances because their lives must continue and their support for their families needs to continue. We, as a community and as a country, must have that degree of compassion that will ensure we provide a supportive hand to them in their hour of need.

I wish the legislation well. Despite my party's misgivings, it is important at this time that it will provide the framework to resolve what are serious difficulties. I am sure that those who framed the legislation looked at what happened in other jurisdictions where there was excessive borrowing, property bubbles and ensuing insolvency difficulties and that all the best practice achieved through the test of experience in those jurisdictions is reflected in the legislation.

See this speech in context