Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I believe the answer to this is one could not. For example, in the current climate some people may have been in arrears for the past three years and while the banks have not dealt with overall settlements, they have engaged in substantial forbearance for tens of thousands of people. This is a reality. Members properly kick their absent friend, Deputy Ross, who has not engaged in this Bill at all. He has not participated on Committee or Report Stages and has not tabled a single amendment to it. He uses this forum as a stage to regularly kick the banks and while there is a great deal for which they can be criticised, the truth also is that had they not engaged in debt forbearance and had certain Government decisions not been made which encouraged debt forbearance, tens of thousands of people, who remain in their family homes and with whom at least temporary or intermediate arrangements have been made, would otherwise have been facing repossession proceedings. In reality, we have had debt forbearance on a grand scale but this tends to be ignored.

I agree with the Deputy - this is the reason Members are passing this legislation - that what is needed is what I would describe as final resolution. We need the mechanisms that facilitate final decisions being made where debt forbearance will work and where over a period of years, people will be allowed to work through their debt position, there is light at the end of the tunnel and obligations to creditors ultimately are met or are met in a recalibrated way that allows one to exit. This is one sense of this proposal. However, in the context of the debt resolution mechanisms, it is clear that within each, from the lowest one down, that is, the debt relief notice, all the way up to the PIA, there is the understanding and the architecture to provide for debt forgiveness or debt write-off, where appropriate. It is that piece of the jigsaw which has not yet been addressed adequately.

I note that in arrangements reached between creditors and banks in some instances, certainly for business purposes, there have been arrangements of debt write-off. In cases where has been a perspective that a business is viable, there has been some element of this. However, in the broad sense of residential mortgages, it still has not been addressed adequately and where it has happened - I know of some cases, albeit not many - it is not publicised. The banks have a fear that as soon as one uses words such as "write off" or "forgiveness", individuals who quite clearly can pay will contrive to create circumstances in which they may try to seek debt write-off in circumstances in which it is not warranted and which is unfair to taxpayers. One must remember it is taxpayers who have been financing the banks and no matter how one might deplore the previous behaviour of financial institutions, everyone in the State has an interest in ensuring the banks' capitalisation is sound. Everyone has an interest in the banks playing a normal role in the economy. The Deputy was correct when he noted we are not in normal times. We are not as we are in extraordinary times, unfortunately. However, we must build the mechanisms around this and the mechanism being proposed here provides an opportunity to address these issues.

Were one to take the timeframe from the date someone went into arrears, it would not work because the idea is that one works through one's debt over the period from the moment when the agreement is reached. Were one to do that, it might suit some debtors to manipulate the system whereby one becomes engaged in a never-ending negotiation to effect some solvency resolution but one knows that as the time ticks, one is reducing the period during which one might be obliged to make some repayment and one will exit quicker. Consequently, there could be a disincentive for debtors to come to resolution. In the context of the timeframes, it is reasonable and rational, particularly in respect of the personal insolvency arrangement, which is a new mechanism, that a reasonable time be left, both to work through debt and to cater for changed circumstances. Individuals who may be unemployed at a time when such an arrangement is entered into may get new job opportunities and their world may change. Moreover, the mechanisms provide that if someone's circumstances change after initial agreement has been reached, it will be possible to recalibrate or to change the agreement or to exit earlier.

While the Deputy is correct about several issues, he is absolutely correct about one particular issue, which is the five or six-year period is a maximum and is not compulsory.

In this regard I agree entirely with his comments. If the financial circumstances are absolutely clear, with no reason to believe they will drastically change and where the deal to be done is blindingly obvious, there is a good argument that part of the agreement might allow for a party to exit early. That might apply particularly to the case the Deputy outlined of a Wicklow constituent. The agreement may span two or three years of payments and at the end of that both sides may see an advantage in exiting early.

The issue of how much income is retained is a value judgment. We can park the financial institutions for a moment as there are many other categories of creditors. If a person retains 50% of net additional income, it would be reasonable for somebody running a small business, which may be in difficulty because people owe it money, to say it is grossly unfair. The business may not be happy that people can retain 50% of income but there must be an incentive for people. It would be grossly unfair for people to retain an even bigger tranche of income for lifestyle benefits and not pay the business what it is owed.

An individual may have had a holiday to the south of France two or three times a year but that practice may have temporarily stopped. If that person's job position changes, leading to additional income, is it fair for the holidays to resume when creditors are not being paid? Being able to retain 50% of net income is a real incentive for people to work harder and create opportunities, whether self-employed or needing to work overtime if in employment to generate income. There must be a point where that issue is utilised, particularly when there is debt forbearance or forgiveness, in trying to get people to meet debt obligations. The provisions provided are reasonable.

I hope I have addressed the issues raised by Deputy Donnelly. We have probably gone on far too long with the issue with regard to Report Stage time constraints but it is important. I thank the Deputy for raising it.

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