Éamon Ó Cuív (Galway West, Fianna Fail) | Oireachtas source

-----highlighting of this issue. Could this Government have done anything about this? The Government's policy, for a reason that I cannot get my head around, is to sell off all the assets it owns as quickly as it can through NAMA to the IBRC, irrespective of the price. For some strange reason it is hell bent on getting rid of the State's valuable AIB shares, which if held onto long enough will become very valuable. I note the Minister of State, Deputy Harris, is shaking his head. I forecast that when NAMA is subject to the freedom of information legislation what we will learn about the policies followed by this Government will be very interesting. Rather than maximising the take for the State, it is allowing the banks to put the burden of tracker mortgages on variable interest rate mortgagees.

The response of the Minister of State will probably be that the Government cannot interfere with the banks and that to do so would be terrible. I accept that the banks are free agents but the Government and the Central Bank cannot stand by and allow people to be charged extra because the banks are losing money on a bad product they sold. If this happened in respect of the ordinary consumer product, the Consumer and Competition Authority would be calling for legislation to prevent the charging of inflated prices by a cartel. We cannot allow the banks to do this just because they sold a bad product, namely, the tracker mortgage which, although great for the customer, was bad for the banks.

Does the Minister of State want to know how to deal with this issue? Fianna Fáil put forward a very sensible suggestion in this regard in its last budget submission. We suggested that tax relief at source, TRS, for those who took out mortgages during the noughties be increased. I will explain how this works. Tax relief is given on the interest payable on the mortgage. I know the Government is currently trying to put an end to that, which I believe is bad policy. The tax relief is deducted at source. In other words, it is deducted from the interest bill. This means that the monthly mortgage amount is decreased by the amount of interest relief. Fianna Fáil proposed that mortgage interest relief be increased, resulting in the monthly repayment per month being reduced by the increased amount of tax relief at source. If, for example, 30% relief was allowed on every €1,000 interest, this would mean a reduction of €300 on every €1,000 interest due. If the TRS was increased to 45%, the result would be a €450 reduction in the interest amount payable, which means instead of having to pay €1,000 in interest the person would only have to pay €550. This would be of major benefit to the banks because it means more people would be able to pay their full mortgage. It would also ease the financial pressures on people, which is good news for the banks. The Government could have ensured that the tax relief at source, on which the banks are depending to get their payments, would only be payable to banks if the variable interest rate was brought below, say, 3%. The banks would immediately be under pressure to bring interest rates down to the competitive international rates about which the Government continually speaks. The banks would be anxious to ensure all of their clients received this tax relief at source because they would be aware that a loss of tax relief at source would result in their not getting their payments, leading to an increase in their arrears. This would not cost the banks anything because with the tax relief at source those currently only paying interest would be able to pay the interest and the capital amount and those not able to meet the full cost of their interest would be able to do so. Those who are paying the interest and the capital but cannot meet the cost of their unsecured loans would then be able to start to repay their unsecured loans. In other words, it would increase people's ability to pay, which would mean that what the banks would lose on the swings they would gain on the roundabouts, and would bring a bit of fair play to the game.

However, the Government never looks to see what can be done. It never looks to see what new possibilities exist. It seems to apply a hands-off principle to everything and believes it cannot touch the system, including not talking to various agencies. In the meantime, the ordinary punter is suffering.

I have worked on this mortgage issue since I was Minister for Social Protection by increasing and improving mortgage interest relief. Does the Minister of State remember mortgage interest relief? People used to get it if they lost their job to help them pay the mortgage. It was in the four-year plan the Government is always quoting back to us and that it claims was so immutable. However, it was able to get rid of mortgage interest relief even though it was specifically mentioned in the four-year plan.

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