Pádraig Mac Lochlainn (Donegal North East, Sinn Fein) | Oireachtas source

The Bill is well overdue and I welcome its publication. This chaotic Government tried to kick this issue to touch for as long as it could in asking the Joint Committee on Finance, Public Expenditure and Reform, and the Joint Committee on Justice, Defence and Equality to look at the issue. Both committees were emphatic that we had to move to one-year bankruptcy but still months were allowed pass. Eventually the Government had to accept the demand for a one-year rule. In its last weeks it has struck the Government that maybe those in debt needed some more protection when struggling against the banks. This was a novel thought for the Government, but a blindingly obvious one for those of us working with people in debt in the real world day-in and day-out.

I welcome that from the day of commencement a one-year bankruptcy term will be available for everybody in the county, North and South. The use of the boat to Britain to exploit the one-year bankrupt terms there will hopefully come to an end and debtors in Ireland will be able to face up to bankruptcy in our own court systems. I welcome that a businessman facing bankruptcy in Donegal now has the same rights and responsibilities broadly speaking as a businessman in Derry.

Regardless of any wishful thinking expressed here today, I am under no illusion that this change will be a panacea to the country’s still huge debt problem. Those most likely to benefit are those with larger, more diverse debts. This is a solution more for the businessperson with many debts, business and personal, rather than for the homeowner whose debt is concentrated in a mortgage on the family home or even in a buy-to-let arrangement. For those people this move will be of limited use as the Government decided a long time ago that they were for the wolves or even the vultures.

Let us consider the facts. There were 206 repossessions during the most recent quarter, but that does not include so-called voluntary surrenders. In truth, 422 families lost their homes during this period which was identical to the previous quarter. That means four families a day are losing their homes. When these figures were first published in March 2012 the figure was 165 homes for the first quarter in 2012. Even when arrangements are made with homeowners they are more often than not the most unsustainable kind, such as arrears capitalisation or split mortgages.

Despite recent falls, the number of family homes in arrears of over 90 days stands at 8.7% of the total number of homes. In March 2011, the number was 6.7%. That shows the scale of the Government's failure. The idea of a tough Government making the banks act reasonably is well and truly dead. We have a walkover Government that has chosen the banks over homeowners and does not care about the social and economic consequences.

My party supports the Bill as a pragmatic step but it is no cure for five years of bad decisions. It is in fact an admission of failure. The Insolvency Service of Ireland has failed to be an effective remedy for tens of thousands of families who found themselves in debt after previous Governments and the banks had ruined the economy. It was supposed to an alternative to bankruptcy. That we are liberalising our bankruptcy laws here today shows that did not happen. Like every other measure taken by this Government to tackle the debt crisis it has not fulfilled its role. The former Minister, Deputy Shatter, told my colleague Deputy Pearse Doherty that 18,000 people would use the insolvency service in its first year. Even now only 3,000 have made applications. That is a spectacular failure to deliver on one of the Government’s key initiatives to tackle the debt crisis.

In case Government spinners get carried away, the impact even for those who qualify for this new arrangement is likely to be the loss of the family home for many. That is how bankruptcy works. A person's assets are evaluated and stripped away leaving the bare minimum. It does not have to be that way of course. There should be legal protections for the family home and solutions short of bankruptcy which protect the family home. However, that is beyond the imagination of the Government. The banks had to come first. The law had to be changed to let banks off the leash so they could repossess at will.

Some will suggest the Bill creates a moral hazard. Some of them will have legitimate concerns about the future operations of our insolvency laws, but many of those shouting about moral hazard are perfectly happy to ignore the greatest moral hazard of the banks the people bailed out now repossessing the family homes of those same people.

The mortgage crisis rages on with four families a day now losing their home. I hope this step helps prevent some evictions, but the overall pattern is clear. After five years of belated initiatives and failed pet projects we are now in the dying days of this Government tampering with bankruptcy rules.

We had the mortgage-to-rent scheme. By October 2015, four years after the scheme was launched only 246 homes had been purchased under the scheme. Only 7% of the number of families Labour claimed would avail of the scheme have been able to use the scheme successfully. A €20 million fund set up to help local authorities access the scheme has seen only €6 million drawn down to date.

The Tánaiste set up an independent financial service. Up to €10 million would be paid by the banks in a scheme where we were told more than 2,000 accountants gave financial advice to people in mortgage distress. The banks would pay for each consultation with an accountant, which costs €250. The scheme failed miserably.

I hope this Bill does help. My party will support anything that helps struggling homeowners and other stand up to the banks. It is far too late for thousands, unfortunately, and probably in a lot of cases far too little for thousands of others.

See this speech in context