Peadar Tóibín (Meath West, Sinn Fein) | Oireachtas source

Of those with domestic mortgages, 23.5% are in mortgage distress. Behind each number there are families or individuals who invested with hope and now are living in despair. Most of these homes are in negative equity and borrowers cannot escape from them. They are trapped in homes they cannot afford.

The Central Bank states that more needs to be done. Fiona Muldoon of the Central Bank asked what the banks are waiting for. The Governor of the Central Bank has stated that if the banks do not deal with it, the Minister will have to put extra capital into the banks. Under the Government's watch, the problem has doubled in the past two years. The Personal Insolvency Act 2012 will not fix the problem because, significantly, as Richie Boucher has said, there will be no write-downs. While the citizens slide into debt, there is typical Fine Gael-Labour Party dysfunction - words but no action.

It is Sinn Féin's policy that if we fix the real economy, we will fix the debt problem. Sinn Féin's policy speaks of investing in the real economy and developing badly needed infrastructure that will create jobs but will also create competitiveness and efficiencies into the future. A recent study by the Central Bank showed that an investment of €2 billion would have the effect of reducing unemployment by 0.5%. It would have the effect of stabilising the housing market and, possibly, increasing house prices by 2%. This, in turn, would lower projected losses on the banks' mortgage books from 8% to 7.5%. Because of the decisions of this Government of dysfunction, this State is on the hook for the capital requirements of the banks, so a reduction in mortgage defaults would benefit the public finances.

It is also Sinn Féin's policy that an independent, statutory distressed mortgage resolution process needs to be legally binding and needs to work on a case-by-case basis. This would protect the family home through a variety of measures - most importantly, through write-downs, shared equity and transfer of tenure type to social renting. Even if some are oblivious to the human suffering that is going on, and even if their political ideology is based on the size of their wallets, this policy would be of significant benefit to the economy. If we can take the risk out of a mortgage, if we can make a mortgage manageable, we will reduce the level of funding that the State must put into the banks. If we do not do that, we will continue recapitalisation of the banks.

The policy in which the Government is involved has other economic side-effects. It takes a significant section of the population out of the spending economy, which further depresses an already collapsed domestic economy. A functional government would direct the banks to deal with the issue in a proactive manner. It would introduce legislation that gives the Central Bank Governor the power to ensure that banks pass on interest rate reductions from the ECB. It would ensure all budget-related decisions regarding mortgages were passed on immediately by banks and it would ensure that mortgage lenders and inter-bank commercial lenders shared a portion of the burden involved in the problem of mortgage distress.

Critically, the real economy is still limping along, because the Government refuses to deal with this issue. If the Government fixed the real economy, it would result in a positive outcome on the debt crisis and also on mortgage distress. I implore the Government to accept the proposals of Sinn Féin and support this motion.

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