Paudie Coffey (Waterford, Fine Gael)

I, too, welcome the opportunity to contribute on this much awaited legislation. I commend the Minister and his officials on the work involved in compiling and drafting this complex legislation. I also commend the Oireachtas Joint Committee on Justice, Defence and Equality which provided important feedback to the Minister and his officials on a cross-party basis. The Departments of Finance and of Social Protection and their officials were also involved.

Coming as I do from Waterford, which is now an unemployment black spot, I am aware that individuals and families are living under intense strain due to mounting debts incurred during the Celtic tiger era. Many of these genuine people ran businesses, but they now find themselves under increasing pressure due to financial difficulties. We must put down a marker that will ensure we never forget how we arrived at this place and how our economy suffered the crash and crisis we are undergoing. It was the propagation of a property bubble that contributed to the economic crisis. Houses and property were being sold, with little or no regulation or control and little leadership from the political and banking sectors which have contributed to the crisis. Families are now experiencing mounting debt. We were dependent on revenue from the property sector and the boom Celtic tiger years to fund ever increasing costs in the public Exchequer. This is the legacy this Government has been left to deal with.

Trying to resolve these issues will not be easy but this Bill is a step in the right direction. The Government must try to rebalance the economy and put it on a sustainable footing. I was a member of the previous Seanad in 2008 and I remember advice given by the Leader of the time. His advice illustrates the type of leadership we had in 2008, when we had our first experience of the property crash. He said:

Now is the right time to buy. We have a duty to tell first-time house buyers, young couples with no previous experience that there is unbelievable value in the marketplace today. I will remind the House, perhaps in 12 or 18 months time when prices have again increased by 25% or 30%, that they were told this by this Leader of this House on this historic day.

I know it is easy to talk in hindsight, but the property the Fianna Fáil leader of the Seanad was telling young couples to buy and suggesting it would increase in value by from 25% to 30% has fallen in value by over 50%. That is the kind of leadership we got from the previous Government.

I remember a time when the ESB provided a facility for people to buy appliances and pay for them by instalments on their ESB bill. In order to qualify to avail of that hire purchase arrangement, the ESB operated a strict credit control and assessment policy. Many people who could not qualify to buy appliances on their ESB bills suddenly qualified for mortgages, car loans and other credit mechanisms proposed and propagated by the banks. The banks lost all control and competed with each other to provide easy access to credit. The did this through intensive advertising, bulging property supplements in the press, banking incentives of 100% mortgages, interest only loans and general easy access to credit. Now we find ordinary people have been the victims. Some people remortgaged their homes to buy second properties. We all remember the queues outside hotels on Sundays when people were being encouraged to buy foreign properties in places like Bulgaria, Turkey and Spain. We are now seeing the true impact of that easy credit. The banks have been bailed out but they gave out easy money with little regulation. I concur with Deputies who spoke previously that we must call on the banks to step up to the plate now and engage with people in mortgage and debt distress to find a resolution to this mess. This Bill and the mechanisms contained within it will facilitate this.

I would like to acknowledge the role of MABS in assisting people in mortgage and debt distress. The MABS organisation has a valuable and experienced network of negotiators and I would encourage the Minister and his officials to ensure MABS has an important role in any function relating to debt resolution because over the years, MABS has built up good contact networks within the banks and other credit institutions. Every effort must be made by banks and stakeholders involved in this process to achieve fair debt resolution and, where possible, every effort must be made to ensure families remain in the family home.

I hope this Bill will give renewed hope to those who feel they cannot get beyond the huge debt they currently face and look to a new future. This Bill will change the law to reduce the term for bankruptcy from 12 years to three years, an important reduction. The Bill sets out the framework for a mortgage arrears resolution process and a code of conduct on mortgage arrears. The Bill will establish an insolvency service that will oversee the non-judicial personal insolvency system. It establishes three kinds of voluntary debt settlement arrangements, through debt relief notice, debt settlement arrangement and personal insolvency agreement. It is not meant to provide a blanket debt write-down, but has been drawn up to help those who cannot pay, rather than those who will not pay.

I and Deputies from all parties and the Government will monitor closely this process and how the banks engage with those in distress. If the banks do not step up to the plate we will exert political pressure to ensure they engage properly.

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