Dáil debates

Wednesday, 23 September 2009

National Asset Management Agency Bill 2009: Second Stage (Resumed)

 

The following motion was moved by the Minister for Finance, Deputy Brian Lenihan, on Wednesday, 16 September 2009:

That the Bill be now read a Second Time.

Debate resumed on amendment No. 2:

To delete all words after "That" and substitute the following:

Dáil Éireann declines to give the National Asset Management Agency Bill 2009 a Second Reading because:

1. The Government has published neither the Bacon report that underpins the NAMA proposal nor any proper analysis of this enormous initiative in terms of:

a. The enormous risks for taxpayers of using a dubious and politically influenced valuation methodology to pay €90 billion for assets of highly uncertain long-term value;

b. The growing doubts regarding its impact on bank lending;

c. The growing concerns from creating a secretive, politically directed, state-managed, tax funded work-out process for 1,500 property developers.

2. The Government has not facilitated a review by the Oireachtas of independent analysis of alternative banking solutions which international evidence suggests are likely to be more effective at getting credit flowing, less costly and fairer for the taxpayer and less vulnerable to political manipulation and business lobbying.

-(Deputy Richard Bruton).

Photo of Ned O'KeeffeNed O'Keeffe (Cork East, Fianna Fail)
Link to this: Individually | In context

I would like the Government and the people to encourage Bank of Ireland and Allied Irish Bank to seek a rights issue rather than take further capital from the State. There is a buoyancy in the stock market currently and people will be generous enough to further capitalise the banks to which they have a great loyalty. I do not like to see too much State involvement in our banking system and there is a danger of that.

There is a theory that banks should lend money more often. If people do not have the ability to repay the money, there is no point lending the money by way of an overdraft or a loan. That is one of the issues which arises throughout the country. I have met several people who are not in a position to get additional finance from their bank but when one questions them further, one finds they do not have the capacity to repay it and they may not have paid previous loans or leases. We need to be very careful about placing people in further debt.

Earlier I listened to Deputy Shatter make a statement about Mr. Madoff in the United States of America who is in prison. The best of luck to him in that place. However, I do not believe he was a banker. He sold derivatives and was a financial intermediary who took money from people for investment and he abused his position. We have seen that happen throughout the world recently. I am not aware of any banker in America serving a jail sentence for activities in the money area.

I hope NAMA will do what it states, namely, put money into the economy and stimulate activity for the next decade. That is what it should be about. We have the support of the European Central Bank and if €50 billion is to be spent, it must work and be effective. I wish NAMA and the Minister, who has done great work on it, well. It is the first time we have seen anything like this in the country. I believe it is the first time something of this nature has been put in place in the world. I say well done to the Minister who has done an excellent job and has generated great discussion about our country and economy. I am disappointed we do not have the support of all sides of the House.

I am pleased to have the opportunity to add my voice to the debate on NAMA. As far as I am concerned, this is the most important economic legislation debated in the House in the history of the State. It is important for the State, business and ordinary citizens.

We are living in unprecedented times from an economic point of view. The people on the street are nervous. The discussion on NAMA is causing confusion for many people. They are confused about what it will mean for them and they are caught up in a political debate about whether it will be good for them. They are looking for positive, well informed leadership to lead them out of this crisis currently being experienced.

Some of my constituents are angry that we face economic turmoil, some are confused as to how this will improve our situation and some are disillusioned with the issue being clouded in confusion and politicians turning it into a political football. Many of my constituents recall the 1980s, a time when interest rates were in the region of 20%, emigration was rampant and jobs were non-existent. They recall much harder times than we are currently experiencing. However, I do not wish to detract from the seriousness of our current situation. On the other hand, many of my younger constituents do not recall harder times and have only lived through the boom years. They too are concerned and do not envisage how they will cope with less disposable income. On a more positive note, I am a firm believer in our ability as a nation to face this matter and deal with it responsibly.

NAMA is a credible solution to our problems. It will not let the banks, the builders or those who have done so much wrong off the hook. Fianna Fáil is not in the business of letting anyone off the hook. Those responsible for wrongdoing will be made answerable in due course.

There is no doubt that in recent years our banking system has let the country down badly. The banks have shown reckless behaviour and I am confident that those responsible will face appropriate consequences in due course. There has been much discussion about this legislation was a bailout for banks and developers. It is not about bailing out banks, developers or anyone's friends. It is about bailing out a country, that is every man, woman and child for generations to come. Without a properly functioning banking system our country would sink. We as legislators must take responsibility for eradicating this danger and building a fully functioning banking system to bring our economy back from the brink.

Some may claim I am being dramatic with such strong words but the situation is that serious. NAMA is the most creditworthy solution to our banking problems. It has been thoroughly planned and has the backing of the IMF, the OECD and the ECB.

Alternative solutions have been proposed by the Opposition, none of which were convincing. The Opposition has not even managed to cost its supposed solutions. The Labour Party's proposal to establish an asset management agency with a different name would impose a 50% discount on loans being transferred to the agency which would lead to the State having to recapitalise the banks in full, achieving the Labour Party's goal of a State-owned banking system. It would also be in violation of European Commission regulations.

Fine Gael wants to follow the Lehman Brothers model with the establishment of a new magic bank that would borrow €30 billion from the ECB. However, the problem lies in that the ECB would demand collateral, leaving the State to provide the magic bank with €50 billion to €60 billion in bonds, a nonsense. It appears to be a case of finding any solution rather than supporting the Government's solution.

This is a very irresponsible Opposition. It has been in the business of finger-pointing for some years. When times were good, it wanted spending increased. It was not that long ago it demanded stamp duty be abolished. If the then Minister for Finance, Deputy Cowen, had acceded to these demands we would be in a fine mess now. Now the Opposition claims the Government is spending too much. It does not know whether it is coming or going.

The Government takes this matter seriously. It will not walk away from the economic situation in which we currently find ourselves. The NAMA Bill has been drawn up on the basis of expert advice and counsel available to the Government from the NTMA, the Financial Regulator, the Central Bank as well as other financial and legal advisers. Similar solutions have been applied in other countries and have led to successful outcomes.

We are endeavouring to introduce legislation which will save our economy from further crises. This is similar to last year's State bank guarantee for deposits. That courageous action saved our banks from collapse. We now have no option but to examine how to rebuild our banking system through NAMA. Failure to do so would mean many would not be able to get credit from banks. The current crisis needs to be halted or our economy will never improve.

We must ensure those businesses and individuals which are surviving and making profits are facilitated for credit. To do so the banks must be in a position to access credit. NAMA will clear the balance sheets for these banks to return to basic lending functions. NAMA proposes to buy land and development loans and certain associated loans from the banks at prices well below the current book value. They will be managed over time to achieve the best possible return for the taxpayer. The banks will be smaller, cleaner and better funded and will be in a position to focus their resources on their core function - that of lending to those who require credit.

There has been much debate about the valuation of these loans. The Minister for Finance announced last week that there will be an estimated aggregate discount of 30% but that each individual loan will require a separate valuation once the Act commences. There is much attention to detail in this proposal and I commend the Minister's diligence on this.

I welcome the proposal that any financial institution participating in NAMA will be required to restructure its operations which will lead to a reformed and reinvigorated banking system. It is vital we learn from mistakes and ensure they never happen again.

I commend the Minister's endeavours to introduce a legislative regime to deal with distressed financial institutions which will ensure deposit holders are protected while maintaining the competence of the international markets. Aside from the obvious benefits of NAMA to the banking sector and the positive knock-on effects it will have for businesses and households, there is also a noticeable improvement in confidence in our economy. This has led to a reduction in the cost of borrowing for the State, a welcome development.

There is the possibility that NAMA will be in a position to facilitate various Departments for their requirements such as schools, parks and so forth. In the past they had to pay ludicrous sums for such projects. Under this Bill they may be afforded first option on the disposal of such properties.

Over the past year, the Government has at all times taken the necessary tough decisions, many of which were harsh for many to bear. We have not evaded our responsibilities to be popular. We have implemented the changes necessary to bring about stability when required and will continue to do so. There will always be critics who believe things could have been done differently. However, I have the fullest confidence in the Minister for Finance to ensure the greater good of our citizens is kept at the heart of any decision the Government must take in the next three months.

I commend the Bill to the House.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

With the permission of the House I wish to share my time with Deputy Timmins.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

The first requirement of any economic recovery is a clear and clinical analysis of how and why we got in the mess. The Government wants us to forget the recent past while the Taoiseach and his Ministers would have us believe our economic problems were caused by foreigners. Only as late as last week, the Taoiseach blamed the difficulties of the collapse of Lehman Brothers. This is not true. Our problems are very much home-grown.

The economic crisis in Ireland was caused by the Galway tent school of economics. Central to this ideology was the belief that we could build a sustainable economic future on the back of an unsustainable property bubble. The property bubble was supported by a raft of tax incentives and tax dodges introduced by the then Minister for Finance, Charlie McCreevy, and kept in place by his successor, Deputy Cowen, for four years. Its true nature was expressed in Charlie McCreevy's infamous phrase, "If you have it, spend it". Spend they did.

Now Fianna Fáil wants us to forget about the Galway tent. We all heard the story about how many claimed to be in the GPO in 1916. The Galway tent is like the GPO in reverse, with Fianna Fáil Ministers claiming they did not like the Galway tent, that they never spent much time there and it was all a very long time ago. The biggest cheerleader of all for these reckless days was former Taoiseach, Deputy Bertie Ahern. Nobody in Fianna Fáil shouted "Stop". Those who pointed out that the emperor had no clothes were advised to commit suicide.

Why was this allowed to pertain? Encouraged, supported and cheered on by the Government, property developers and bankers went on orgy of speculation, borrowing, lending and grossly extended leverage. The banks themselves became property speculators through special investment vehicles which were kept off balance sheets. A further risk was added when many senior bankers, across our banking system, became property speculators in their own right in addition to the day job. Any sense of a conflict of interest was abandoned. Our bankers lost all sense of proportion, showed little or no understanding of risk and did not seem to realise that the value of the assets they used as collateral was grossly inflated by the easy credit lending of the banks. In the words of Morgan Kelly, "property bubbles are the consequence of abnormal levels of bank lending. Once the bank lending that fuelled the boom returns to its usual levels, prices return roughly to where they started before the boom".

These incompetent senior bankers believed their own foolishness and convinced themselves that they deserved their huge salaries and bonuses. Never has failure been so grossly and brazenly rewarded. Across the whole Irish banking sector there was a failure at board level and a failure at senior management level. The directors of Irish financial institutions turned out to be very expensive mushrooms, fed manure by the senior managers they were supposed to supervise. It is right and fitting that there be a clear-out of board members in Irish banks. There will also need to be a clear-out of senior managers who led the banks over the cliff and who are still in denial about the scale of the problems facing the Irish banking system.

All the while the Central Bank and the Financial Regulator allowed a Frankenstinian monster to grow. Our banking supervisory system was governed by the principles of "hear no evil, see no evil, speak no evil". This supervisory system was hatched by the former Minister, Charlie McCreevy, and the current Minister for Health and Children, Deputy Mary Harney. The current Minister for Finance proposes to radically change the system which has existed for only a few years.

Banking supervision is not rocket science. In October 2006 the Bank for International Settlements published a very useful document entitled Core Principles of Effective Banking Supervision. It is not complicated and is only six pages long. If these principles had been applied in recent years to the Irish banks we would not be in this mess. I commend them to the Minister.

The collapse of Northern Rock in 2007 should have been a wake-up call for all banks, banking supervisors and the Government. All of these entities stayed in denial about the situation for another 12 months. Indeed, the Government and the regulator kept on reassuring us that our banks were well capitalised. Decisive intervention two years ago would have lessened much of the present damage. Instead Fianna Fáil focussed on itself and its crisis of leadership.

Many warning signs were flashing regarding the quality of financial supervision in Ireland but senior members of the Government actively supported and encouraged a light touch approach to regulation. The former Minister and present Commissioner McCreevy boasted on many occasions about the lack of regulation and went on to preach the same stupid message in Europe for several years. Despite high profile corruption cases involving companies based in the IFSC, neither the Government nor the regulator took any action. The Government stood idly by while Ireland's reputation for financial probity was trashed in the international economic arena. Despite the high profile court cases, the loss of reputation and the warning signs the Government sailed on regardless.

In December 2005 at the annual IFSC lunch Deputy Micheál Martin, then Minister for Enterprise, Trade and Employment, assured his audience that he was further weakening the already lax regulations in this area and that the law would be further eased. He said he would "be less prescriptive about methods a company uses to review compliance procedures and in not requiring a review of the compliance statement by an external auditor".

The Minister for Finance would have us believe that there is no alternative to NAMA. This is the same Minister who believes that Anglo Irish Bank is of systemic importance to the Irish economy. How many economists can he quote to support his opinion? The newly appointed Governor of the Central Bank does not support his opinion.

In addition to being a bad bank NAMA will be one of the largest property developers in the world. It is interesting to briefly look at the other bad bank which the Government owns, Anglo Irish Bank. The Government has already invested €3.8 billion in it and may have to invest more. According to newspaper speculation at the weekend that could extend to €10 billion by the time the bank is fully recapitalised. What are the realistic prospects of getting this money back? Eight months after nationalisation the bank has been unable to produce a business plan. We learnt from recent court cases that it was prepared to roll over all interest to the Zoe group up to 2014.

Even more alarming was the willingness of Anglo Irish Bank to lend a further €68 million to the Zoe group to finance the development of a new headquarters for the bank, and all this for a building that does not even have planning permission. What justification is there for Anglo Irish Bank to build a new headquarters in the present climate? What justification is there for it to receive further funds from the Irish taxpayer when it is a dead bank walking? It has no future but the Government is bent on continuing to put taxpayers' money into the bank. This makes no sense.

How is the public interest being served by these revelations from Anglo Irish Bank? What is the Minister doing to stop this crazy behaviour in a bank that we now own? If it is our bank why can he not ensure proper answers to these questions, rather than letting it continue on a course which offers no future for the bank or the taxpayer?

With regard to the Minister's valuation model for assets being acquired by NAMA, Eoin McDermott, chairman of the valuation division of the Society of Chartered Surveyors, wrote in The Irish Times on 1 September, "From a chartered surveyor's point of view, it will represent a departure from conventional valuation that has been developed and well tested over a period of 40 years". The Irish Times last week published a report to the effect that Irish Life had reduced its asking price for three Dublin properties by 50% since May 2008. That was one year after prices peaked. Who is likely to have a better understanding of the Irish property market - Irish Life or NAMA? No one believes that we have reached the bottom of the market. Over-valuing these impaired assets at this stage has extraordinary implications for this society.

Why is the Minister not putting pressure on the banks to sell valuable overseas assets? AIB and Bank of Ireland have substantial assets which could be sold. For example, AIB owns almost 25% of M&T Bank in America. As of yesterday the value of that shareholding was of the order of $1.75 billion, a not insignificant sum of money. Nobody can say that M&T Bank is part of AIB's core assets. AIB would be wise to sell its shareholding in its banks in Poland and elsewhere in Europe as a means of stabilising its Irish business. All the Irish banks have made such a bad job of managing their Irish divisions it is impossible to have any confidence in their management of their overseas divisions. It is quite likely that landmines lie buried in their overseas operations.

The Minister has yet to tell us how he will make sure that the banks start lending again when their balance sheets have been cleaned up. There is nothing in the Bill about that. The Minister has had months to announce a scheme, which should have been brought before this House, in which moneys which are to be put on to the balance sheets will improve liquidity. These are not the IOUs to which the Taoiseach referred but real cash that we must pay back. Unless there is a guarantee that this will lead to some improvement in liquidity why are we taking this gamble? It is bizarre that the Minister did not set out a scheme, either in his speech to this House last week, or in the accompanying documentation, whereby he can prove to the House that the moneys the banks obtain will improve liquidity for Irish business. There is no evidence from his statements last week or from any Government announcement that he has a new scheme and can show beyond doubt that the money the banks get will go to small and medium sized enterprises, householders and businesses that want to survive. Businesses need money now but none of this will come to pass until the middle of next year. Many thousands of jobs will go to the wall and another opportunity will have been lost.

I hope the Government will allow the Opposition to tease out the entire Bill on Committee Stage in the plenary session of this House rather than in a committee of the Dáil. Given the importance of the Bill it is essential that commitment be given.

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
Link to this: Individually | In context

Fine Gael's policy on solving the banking crisis is based on doing what is best for this country. It was formulated long before the draft legislation on NAMA was published and is well thought out. We believe it will work, unlike the Government's policy. However, our spokesperson is willing to engage with the Government and put forward amendments on Committee Stage.

Even at this late stage, we call on the Government to halt. We want this because we do not have confidence in the Government's model. We do not know its potential cost. A valuation has been put on land that is widely disputed by many experts. Deputy Hayes outlined how Irish Life decreased its valuation on several properties. We do not believe we have reached the bottom. In particular, we do not believe there will be a 10% increase in property prices over the next ten years because there is no evidence to suggest that will be the case. We also believe it is inherently unfair that the taxpayer, who is suffering as a result of the recession and the bad management of the public finances and the banking crisis, has now been asked to pick up the tab for any potential losses into the future. We believe the loss should lie with the shareholder and the bondholder.

Equally important, there is no certainty that money will be loaned back into the economy. The advantage of the Fine Gael model was to have the good bank, the bad bank, the national recovery bank. By the end of October we might have had a national recovery bank set up which would have loaned money back into the economy. We see what is happening across the water. The Prime Minister, Gordon Brown, is urging banks to lend to business. Banks will not lend into a recession unless there is legislation or regulation included in the policy that will make them do so. Utterances and pleas from Government will not make them lend back into the economy. Meanwhile, we have several small businesses that are starved of cash, many of which are viable.

I shall outline again how our policy would have made the shareholder and the bondholder responsible. It is not a case of reneging on a national debt. Whether they are from Kiltimagh or Khartoum, people who invest in banks realise they are taking a chance. If it works out, they get the fruits of their investment; if it fails they pick up the cost. That is what investment is about. We cannot see the basis for the valuation of €44 billion, which, when €7 billion is added, comes to €54 billion. That figure was called an estimate in recent times by the Government.

There is no mechanism in place to ensure the banks will give back the money, which is one of the biggest flaws in the current system. The IMF has pointed out how Government-managed asset companies have been largely ineffective due to political and legal constraints. We all know there will be political and legal restraints regarding the proposal and model the Government is setting up. The Irish economy needs a functional bank system to assist our economy in recovering.

When the recapitalisation and investment money is given over to the banks, it will have come from the taxpayers. They are writing this cheque. Banks will use that money to pay off their own liabilities to other banks and international money markets and will not lend to Irish business. Unfortunately, if we go ahead with this legislation without having amended it as we in Fine Gael wish, we will be back in this Chamber time and time again over the coming years, decrying the fact that Irish business has no access to funding.

Deputy O'Keeffe mentioned that nobody shouted "Stop!" during the boom. During the allocation of funding for social housing some years ago I remember pointing out that it was incorrect to be putting money into it because doing so was fuelling the property boom. I called on the then Minister, Deputy Dick Roche, to put the money into infrastructural projects. We all bought into the Celtic tiger and got our pound of flesh. We were happy to spend, spend, spend and not think about tomorrow. However, there is an onus on the Government to manage the economy. We can blame the bankers and regulators but, ultimately, the Government, the Minister for Finance and the Taoiseach are the guardians of the public purse.

In his speech, the Minister mentioned the concept of a windfall tax of 80%. I do not know how he envisages this happening. Will it apply to currently zoned land or land that may be zoned in the future? Will it apply only to land that will be newly zoned from here on in, or from a particular date such as the date of the passing of the legislation? It is my guesstimate that no land will be zoned in Ireland over the next ten to 15 years, other than some in the immediate city centre areas of Dublin and Cork, because there will be no demand for it. In the next few years we will see bulldozers going into the Leitrims, Longfords and Laoises to knock down houses because there will be no demand for them. Will NAMA be subject to the windfall tax if it acquires such properties and disposes of them? Will the Minister outline in his summing up speech the amendments that have been published before Second Stage is finished? I refer to land that is taken under compulsory purchase order from individuals. Will this be subject to a windfall tax?

The concept of a community dividend was mentioned. We all like the idea of parks and land being given to community projects but I am firmly of the view that if it goes ahead in this form or any other, NAMA should not include a community dividend. Its objectives will be difficult enough to achieve without muddying the waters further. It would also be an easy opt out for whatever authority is established to recoup the money. A community dividend would be an opportunity to let the agency or company off the hook. There should be no community dividend because land will cheap enough to purchase for community projects.

There have been calls for a banking inquiry-----

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

Deputy Timmins, your time has expired.

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
Link to this: Individually | In context

I support the concept of a banking inquiry even if the only lesson history teaches us is that it teaches us nothing.

The responsibility lies with the Government. We can talk about the reform of the banking system but we must reform our own political system. We cannot have Ministers going around the country cutting ribbons, laying cement blocks, cutting tapes and putting on hard hats while the country is going down the Swanee. There is only a limited amount we can do to reform the banking system but we can reform the political system and that is what we need to do first, to get our own house in order. If we do that then we will be able to carry out the changes required in other institutions.

Photo of Noel O'FlynnNoel O'Flynn (Cork North Central, Fianna Fail)
Link to this: Individually | In context

Does anybody remember what happened on St. Patrick's Day in 1985? Ireland's largest bank at the time, AIB, disclosed the failure of its subsidiary, Insurance Corporation of Ireland, known as ICI at the time. That was probably the worst and the biggest financial difficulty the State had ever seen, along with that from two years previously, the failure of the PMPA with liabilities of approximately £223 million.

During that time, commentators pointed to the various potential warning signs that were available in advance. Regarding ICI, for example, it was remarked that for several years ICI's reserves against future claims represented a much lower ratio to claims paid than the industry average-----

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

On a point of order, given the scale of this Bill, it is important that the House should have a quorum for the session.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

I ask Deputy O'Flynn to resume.

Photo of Noel O'FlynnNoel O'Flynn (Cork North Central, Fianna Fail)
Link to this: Individually | In context

I hope I will have a chance to finish my contribution because it is important.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

Time will be added on.

Photo of Noel O'FlynnNoel O'Flynn (Cork North Central, Fianna Fail)
Link to this: Individually | In context

I was making the point about ICI whose underwriting losses in 1982 went from £0.5 million to £7.3 million. At the time, ICI was selling insurance premiums in its London office, insuring satellites, bloodstock and fairgrounds. All of this collapsed and there were hundreds of millions worth of claims against the company. The Government of the day had two options; it could have stood back and let the liquidation take place when the company was about to go into liquidation or it could have responded appropriately to the consequences. The Government could either assume the liabilities of ICI from AIB or it could allow a run on AIB's cash which would have been a run on the bank and which would be contagious. Who saved that company and who made the decision? None other than Dr. Garret FitzGerald who was the Taoiseach of the country at the time and Mr. Alan Dukes who was the Minister for Finance. They decided that this company could not be allowed to go into liquidation and that AIB was to be allowed to walk away. They decided that the reputation of the country was so important that the claims against the company should be honoured and that existing insurance premiums should be fully covered. This was the decision taken during a very difficult period for the country. I understand it cost several hundred million to solve that problem and we all remember the 2% insurance levy and the PMPA.

It is interesting to note that the administrator of ICI at that time was Mr. Donal O'Connor who is now the chairman of Anglo Irish Bank. I was talking to Mr. Alan Dukes last week and he said that ICI as a company has still not been wound up because there are still claims being dealt with 25 years later. It is important for the Opposition to remember that this was a decision taken by the Government of the day and it was the correct decision so as not to allow Ireland's reputation to be tarnished by allowing a major company, which had insured a variety of assets all over the world, to fail and not honour the claims.

This is what the Government is trying to do with NAMA. The banking system provides vital working capital for Irish business as this is the lifeblood of business. Every sector from agriculture to manufacturing is suffering from a lack of access to overdrafts and working capital. They cannot buy stock or trade because they do not have confidence.

I have been in business since 1 April 1985 - April fool's day. I am no different to anybody else. Our company has suffered, our turnover is down. We deal in the motor trade, in the motor parts business and car sales are down 60% to 70%. The message from my employees is that customers and other businesses do not have confidence in themselves, in the country or in the economy. They are afraid to purchase out of fear they will be unable to pay for the goods when payment is due. They are not receiving support from the banks because the banks are looking at their business and reducing rather than increasing overdrafts. Businesses which have never had any difficulty with banks or with trading are the ones who are suffering because of this crisis. The result has been job losses in the economy. The live register figures in August were at 428,000 people whereas one year earlier the live register figure was 236,000. Lack of working capital is a particular problem for small businesses who do not have major reserves and who are dependent on overdrafts to keep their businesses on the go.

It is important to put in place a firm foundation for the Irish banking system. This is the first and most immediate issue facing the Government and this nation. Several Members have also made the point that this is not about rescuing the banks or developers but rather about saving the jobs of hundreds of thousands of people who are not greedy, who did not go mad in the boom but now are being thrown out of a job because of the collapse of the banking system and its inability to lend to productive enterprises.

I have looked at the options put forward by Fine Gael and the Labour Party and I genuinely believe that the Fianna Fáil-led Government and the NAMA option is probably the best one at this time. It is not without fault but it is the best option. It is neither perfect nor without risk but if we abandon plans to implement it we will destroy international and investment confidence in this economy and the ability of the Irish political system to provide leadership in a time of crisis. Failure to implement NAMA will turn Ireland into - I hate to use the term - a banana republic. That said, we have a duty to minimise the risks to the taxpayer by ensuring that valuations paid for bank assets are realistic and that an element of risk sharing is put in place, along the lines advocated by the new Governor of the Central Bank, Professor Patrick Honohan. The Minister has set out clearly how the risk will be shared. Realistic valuations should be based on international experience of property boom and bust. I read recently that Professor Morgan Kelly of University College Dublin estimated that between 2000 and 2007 while nominal GNP rose by 77%, mortgage lending rose from €24 billion to €115 billion, lending to builders rose from €2.4 billion to €25 billion and lending to developers from €5 billion to €80 billion. Should the usual post-bubble correction occur in Ireland, this suggests that real prices of residential and commercial property would return to the levels of the mid to late 1990s, two thirds below peak values. This seems to me to be a realistic and suitable valuation and one for which the Government should aim.

The tax-paying public are being asked to risk a considerable amount of public money to save the banking system when there are many demands from the old, the sick and disabled which we cannot meet. The public have a right to demand that bankers and developers, whose greed, arrogance and stupidity precipitated the crisis, pay and are seen to pay for their misdeeds.

I note that the Director of Corporate Enforcement and the fraud squad are in Anglo Irish Bank. I understand that as many as 400 witness statements will be taken along with the forensic investigation of all transactions and decisions of the bank. This bank has done major damage to Ireland's international credibility. We must show that we are serious and get to the bottom of decisions taken by that bank and other financial institutions.

We must also show that we are serious about regulation. The Financial Regulator was asleep at the wheel. Instead of monitoring the banks and other financial institutions, his staff spent their time hounding mortgage brokers regarding the content of their adverts. They hounded people who were trying to make a living instead of monitoring what was happening in the banks.

On 22 January last, I wrote to Deputy Michael Ahern, Chairman of the Joint Committee on Finance and the Public Service, asking for a full investigation into what went wrong with the bank. Dr. Colm McCarthy made the same call a couple of months ago but I made it in January. I wrote:

Dear Michael, I would be grateful if you and your Committee, Finance and Public Service Committee, would investigate the circumstances and failures of the banking and financial systems regarding Anglo Irish Bank.

The role of the Central Bank, the role of the Financial Regulator and the role of the Director of Corporate Enforcement, the role of the Department of Finance and any other State bodies and the banks auditors associated with the bank.

The confidence in the banking system has been seriously undermined by the revelations which have emerged from Anglo Irish Bank in recent months.

Confidence must be restored in our banking system and in us, as legislators who make the laws to regulate banks and financial services in Ireland.

I would urge your Committee to use its powers to compel witnesses and discovery of documents under compellability legislation which was used in the DIRT inquiry.

Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act.

I served on the mini-CTC inquiry, which was brought to a halt by Mr. Justice Kelly in the High Court in 2001. The Abbeylara inquiry was also brought to a halt. Of course, we had a very successful DIRT inquiry. We have solved these problems legally, as a result of these inquiries and we are now in a position to continue with them. When all this is dealt with and if prosecutions are taken against individuals, the Oireachtas should get to the bottom of what went wrong in our financial system so that if we introduce regulatory legislation we will do so having been informed by a proper inquiry.

I have seen people come before Oireachtas committees whom I do not believe have been truthful. Much of the information given by witnesses to committees in the past 12 months was evasive and not the truth. The only way to get at the truth is to use the powers of discovery and compellability which would ensure that witnesses appearing before committees would have to tell the truth and produce documents.

The National Asset Management Agency will purchase land and development loans from the banks, together with their largest related investment property loans, at a discount to book value. We are doing this in order to help banks to clean up their balance sheets, reduce uncertainty regarding their bad debts, boost the flow of credit to businesses and households and kick-start the economy. NAMA will purchase the loans through the issue of Government bonds. Many people think we will, physically, take money out of the taxpayers' purses and give it to the banks. We are giving a piece of paper which will allow a bank to go the European Central Bank and draw down funds based on the value of that bond. NAMA will pay 1.5% for the privilege of having that money available to the Irish banking system.

Of course, the decision to take not only the impaired or non-performing loans but also performing loans and property assets, was correct. Some 40% of the loans taken are performing loans. Those performing loans will help pay the running expenses as well as the interest rates on the money drawn down by the banking system.

This is not a bailout for borrowers who have purchased these properties. All borrowers, no matter who they are, will be required to pay back all the money they were lent, including rolled-over interest. If they fail to service their debts, NAMA will call in their loans and take possession of the assets on which the loans are secured. Until now, the banks were hiding these loans on their balance sheets. They were rolling over the interest because they could not get it from borrowers. They could not get blood from a turnip. They did not want to liquidate people who owed them €1 billion or more because that would reflect badly on the bank. One bank has done this because it is not an Irish bank and is, obviously, trying to exit Ireland.

It is important for the people to know that even though we are buying the book debt it will not simply sit there. NAMA will make firm decisions on what is to be done, whether something is viable, whether it can pay its way or must be liquidated, in full or in part, to repay developers' loans.

The banks have much to answer for. They competed for business and did not want others to get it. They took extreme risks. When the banks deal with smaller business people now, they roast them.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context

Hear, hear.

Photo of Noel O'FlynnNoel O'Flynn (Cork North Central, Fianna Fail)
Link to this: Individually | In context

No one is roasting me, but I know several business people who are finding it difficult. Banks are being aggressive towards businesses that have worked hard to employ people and provide manufacturing goods and services. They are placing people under pressure at a time when they should not. It is not the people's fault that there is a slow down in the economy and a fall off in business of 30% to 60%.

In Athlone recently, I made it clear to the Minister that we need banks to guarantee that, when assets are removed from their balance sheets and they have the ECB's money, money will flow to businesses and house owners and the haranguing and pressuring of decent people who are trying to run their businesses and keep people employed will stop. For any employer, there is nothing worse than needing to put someone on a three-day week or make employees redundant, particularly where a person might have served for 20 years or longer. This is distressing for any business person who values employees, and they lose skills and expertise. Unfortunately, for businesses to survive and to cut costs, difficult decisions must be made.

I send a clear message to the two major banks, AIB and Bank of Ireland, that they should stop what they are doing and try to help businesses and people to survive in these difficult times. I have great confidence in the country. We are an open market economy and I do not doubt that we will come out of the recession, do well again and prepare for the upturn over the next 12 months. That upturn will only come if working capital is available to businesses and confidence is restored in the economy so that people are not afraid to trade or buy goods and services and are not worried that their bank managers are waiting to take them into surgery and dissect them.

Photo of Joe BehanJoe Behan (Wicklow, Independent)
Link to this: Individually | In context

I will share my time with Deputies Maureen O'Sullivan and Finian McGrath.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Joe BehanJoe Behan (Wicklow, Independent)
Link to this: Individually | In context

This legislation is unprecedented in its scope and potential impact on our small nation. In my 25 years as a public representative, few issues have caused me such deep concern. As a parent, teacher and public representative, I have made decisions that affected the lives of others. I have always taken this responsibility seriously and it is why I have listened carefully to all sides of the debate on this issue inside and outside the House.

Those being asked to shoulder the enormous burden proposed by the plan, the people of Ireland, should at the very least be given an opportunity to express their opinion by way of a referendum. However, as in the past in the House, I am in the minority on this issue. It is ironic that we cannot trust the people with decisions of this magnitude. Is it any wonder that they no longer trust politicians?

Before I detail some of my concerns I ask the people and every Deputy to stop, think and ask themselves one simple question, namely, why are we expected to accept that precious billions of our hard earned euro should be shovelled immediately and without question into discredited and dysfunctional banks that made enormous and obscene profits on the backs of ordinary decent people? Many do not agree with this plan and are deeply upset by it. We have a great responsibility to ensure that their voices are heard in this debate.

I question many aspects of the Bill and the Minister for Finance must deal with them in his reply. How will a probable rise in the ECB interest rate affect taxpayers' exposure? Will an increased rate affect our ability to repay our debt and how can we quantify the pressure this will put on our already overburdened Exchequer funds? Why is NAMA paying €9 billion for the rolled up interest of developers' loans? It appears that recycled and rolled over debt is a major problem in the global financial crisis and threatens to derail many of the mitigating measures already in place. Is this the case and, if so, how are we going to deal with this further threat? Why is the risk-sharing element so pathetically low? If the banks are to show the gratitude about which the Minister talks, they should accept a higher element of risk for these loans. However, could I be so bold as to suggest to the Minister not to be so naive as to expect gratitude from institutions, the raison d'être of which is the bottom line and which have no concept of the common good?

I am convinced that we are paying too much for these loans. Having listened to many commentators, the market value of the assets is less than stated. The provision for long-term economic value is too generous and forecasts for recovery are too optimistic.

My other major concern about the introduction of NAMA is that, for the banks, it appears it will be business as usual. I seriously question whether there is sufficient impetus for reform in our banking institutions. If we do not insist on radical reform, we will see a return to incentivising quick profits. The Minister stated: "This Government is determined to re-fashion the financial and banking system, and to address and correct all regulatory and governance shortcomings". These are mere words. How will this be done and what level of public and Oireachtas accountability will be provided?

In the large and understandable public outcry about the behaviour of banks, a caveat must be entered. The vast majority of bank employees are just as much victims of the misdeeds of the senior management in their institutions as we are. It is wrong to take out our frustrations on ordinary bank staff who are trying to make ends meet like the rest of us and who had no hand, act or part in the disgraceful conduct of their bosses. What assurances will the Minister provide to those ordinary staff members that they will not be victimised for the actions of others?

I have deep misgivings about NAMA. The more I hear about it, the less I like it, but I will hold off on making a final decision until I have heard the Minister's response to the debate.

Photo of Maureen O'SullivanMaureen O'Sullivan (Dublin Central, Independent)
Link to this: Individually | In context

Sean O'Casey gave us the lines "the whole world's in a terrible state of chassis". This sums up Ireland, in that we are in a state of chassis. Why? It is due to reckless lending on the part of banks and developers chasing profits and increased turnover. It is due to the minimal and at times non-existent State regulation of the banking and financial sectors. It is due to what can only be called an orgy of property speculation based on greed and private gain. It is due to the fact that we seem to lack a vision of the type of country and society in which we want to live. It is due to the unhealthy relationships between bankers, developers, financiers and politicians. Above all, it is due to the fact that this State, especially the Fianna Fáil-led Governments of the past decade, ceased putting the needs of its people above the driving greed of those developers and bankers and, in the process, turned its back on the values of fairness, social justice and equality.

The crisis is also due to speculation in the price of land and the issue of rezoning. Land was rezoned by politicians, banks lent money to the speculators and developers and we are left considering the excessive cost of the tribunals trying to unravel this mess. Why were the recommendations of the Kenny report not implemented, and what do we have to show for this? Heavy mortgages, negative equity, the price of land allowed to move way beyond its actual value, developments of apartment blocks with gated communities inhospitable to families and built with no regard to the existing culture and environment, unlived in estates in towns and villages, rotting hulks of unfinished buildings, massive job losses and, above all, wasted opportunity.

What do the young people I had been teaching until last June have to look forward to? They will have few opportunities for jobs, for the realisation of their many talents and for nurturing their confidence in a safe, cleaner, more equal and friendly society. So much could have been done in the more prosperous years. So much now remains to be repaired in the wake of this Celtic catastrophe.

We can examine the Docklands area of Dublin Central as a microcosm of the macrocosm. Community activists, including the late Mr. Tony Gregory, ceaselessly questioned and opposed the manner of this development because it was based on the greed and profit of developers and bankers, aided by politicians. There are key prime examples of arrested developments and unfinished buildings. It is suggested that they should be left in place as a type of museum, a warning to future generations of what happens when dictatorial greed is the motivating and unifying factor among bankers, developers and politics.

For me, some of the worst excesses have been the payments, bonuses and expenses of those in high positions in business, banking, finance, development and State agencies, and the easy access to multi-million euro loans, secretively concealed. It appears that here, bonuses are disaster related and not performance related; the bigger the disaster, the bigger the bonus. Consider the wages being paid and what we are getting in return. It is obvious that high wages and bonuses do not necessarily bring the best brains and the most committed to the job. Shakespeare stated there was something rotten in the state of Denmark but, equally, there is something rotten in the state of Ireland.

So much money is being provided for NAMA that it is mind boggling, particularly for those who are struggling, whom I meet every day. I refer to hard-working people losing jobs and homes. My constituents are living in the shadows of fear over what is yet to come. The figures are mind boggling for people on community projects and drugs projects that are facing uncertainty. They are mind boggling for the people living in locations such as O'Devaney Gardens, Croke Villas who were left shattered by the collapse of the public private partnerships, and for those trying to survive on social welfare payments.

I accept we need a functioning banking system for the efficient operation of the economy but that functioning banking system must be open, transparent, honest, accountable and responsible. My concern is that we are giving the same people who let us down the task of saving the country. They were not open, honest or responsible but reckless, greedy, selfish and motivated by private gain. They just took and gave nothing in return and still refuse to accept responsibility for the economic collapse. These people have let us down and they must not be allowed to do so again.

The Taoiseach rightly said he wants to return the country to growth for the benefit of all. Is NAMA the right way to do this? I wish to believe those proposing and supporting NAMA are doing so with the best interests of the people at heart. I accept every solution to the current economic crisis involves risk. A very significant risk associated with NAMA is the fact that the lands bought by developers at excessively high prices, and whose price has now collapsed, will at some time increase in value again. Will that set in motion the exact cycle that has brought us to the point of economic and social "chassis"?

No matter what solution is put forward - NAMA, nationalising the banks, temporarily or otherwise, or having a good bank-bad bank arrangement - there must be certain minimum requirements. These include absolute protection for the taxpayer, who should not have to pay for the blunders of the bankers and the sins of the speculators, as many are now doing; strict and independent regulation of the banking and financial sector and accountability in the Dáil; a complete clear-out of directors and senior staff responsible for these disasters; stringent regulation of salaries, bonuses and dividends; and mechanisms to ensure the banks and financial institutions release funds for productive and social purposes and do not use taxpayers' money for private investment or as a counterweight on deposit for some other far-flung foreign investments. Risks must not be shouldered by the taxpayer and those on social welfare, and buildings, sites and assets should be used in a creative and socially beneficial way. Above all, a responsible, honest functioning banking system with a social conscience is required. We must get it right and we must be guided by principles of fairness, social justice and equality.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context

I thank the Ceann Comhairle for the opportunity to speak on this Bill at this important time in the economic crisis. It is important that all Members deal with the real issues in people's lives and generate important ideas to resolve our problems. We need leadership and vision to deal with the economic mess we are in. Leadership is about doing the right thing at the right time in the interest of the people but it is also about taking responsibility for one's actions. Sadly, this is not happening enough, both in this House or in banking, and among developers, speculators and a section of the business class.

Although the international economic downturn has affected Ireland, let there be no mistake that we have witnessed economic treason on the part of bankers, speculators and developers. The people are hurting, angry and fed up with all those who have shafted their own country. That is the message I want to introduce to the debate before talking about solutions.

Emotion, sound bites and anger will not get us out of this mess. Playing politics will not help this country. My agenda on NAMA will depend on protecting the taxpayers, mortgage holders, small businesses and the weaker sections of society. I will study all proposals and amendments in the House. If the final legislation is not people friendly, the House can forget about my vote. That will be my clear position over the next month. As with the second referendum on the Lisbon treaty, I will pay maximum attention to all sensible proposals and solutions and vote accordingly. That is where I stand and there will be no fudge when I make my final decision. I have heard the Government say it is open to new proposals and ideas. Let us see whether this is so over the next few weeks. I will judge the Government on its actions.

The economic meltdown has the potential to tear our country apart socially and at the level of the individual. A new vengeful generation has seen its prosperity sacrificed upon the altar of voodoo economics. Bitter divisions are emerging, some of which are being stirred up by irresponsible media elements. Some public sector workers are being pitted against precariously employed private-sector employees. Social welfare recipients are pitted against poorly paid immigrant workers. Behind every statistic lies the human cost in poverty, family breakdown, depression and suicide.

It is important that we who subscribe to the ideas of an chéad Dáil Éireann should be to the fore in promoting the measures to which I refer. It is urgent to reimpose regulation on the whole banking and financial services sector. Regulation was gradually stripped away by the new right since the 1970s. There should be a wall separating commercial banking and saving from casino capitalism, high-stakes property speculation and gambling on global stock markets.

Let me make some proposals. The NAMA legislation must include a section debarring any former owners, directors or executives of development companies, financial institutions or banks connected with the toxic debts from owning, buying or having any beneficial interest whatever in the assets being sold by NAMA. The legislation should contain a provision to protect those defaulting mortgage holders who, through no fault of their own, find themselves unable to make repayments to those financial institutions we are about to support. Why is nobody talking about the poor mortgage holders in this debate? The silence is deafening.

While NAMA and its spending of taxpayers' money should kick start the banking system, the legislation should state clearly that the protection of existing bank shareholders or bond holders must not be a consideration. NAMA legislation should be cleansed of all those provisions that give the Minister for Finance the power to intervene and meddle in its operations. NAMA should come under the democratic control of and be answerable and accountable constantly and continually to the Oireachtas. The objectives of the NAMA legislation should include a social dimension. In this regard, land banks and assets that will come under the control and ownership of NAMA should be used to facilitate the provision of sites for social infrastructure, including schools, health centres, community centres and leisure centres.

These are all sensible proposals and should be accorded priority in this debate and in the legislation. I welcome the recent comments of the Minister for the Environment, Heritage and Local Government, Deputy Gormley, to the effect that this is part of his agenda also. I hope he will deliver on these issues.

Let us consider the three options. The Government's NAMA option would create a bad bank which buys up all the property loans from the banks in return for Government guaranteed bonds of an amount less than the original value of the loan. The loan would continue to be repaid with the expectation of a bounce by the market. This is risky and potentially costly. How does one value property in the current climate and how much will the taxpayer pay?

I refer to the Fine Gael proposal of a good bank bad bank. This is a twin-track plan to make credit available by setting up a wholesale good bank with a clear balance sheet funded by the European Central Bank. The banks would be given until the end of the guarantee in September 2010 to show they have repaired the balance sheets. However, the weakness is that the plan appears to envisage not paying bondholders and the possibility of banks defaulting. What would this do for our perception internationally? These are legitimate questions.

I refer to the Labour Party proposal on nationalisation. Normally, I would be in favour of nationalisation but I would rather go after banks when they have money, not when they are bust. The temporary nationalisation suggested by the Labour Party would extend for the period covered by the bank guarantee and during this limited period of public ownership balance sheets would be cleaned up with substantial State investment before being re-privatised. However, the weakness in the argument is that corporate depositors do not like nationalised banks. How will the banks raise capital to lend money if they are State owned? These are legitimate points to raise in the debate.

There is much talk of rescued bankers, builders, developers and speculators. I seek for the agenda in this House to represent those who work with disabilities, drug treatment services and education services. I put it to all sides of the House that these issues must be priorities in the broader debate also. I welcome the statements today from SIPTU and IMPACT dealing with the communities sector employers' forum and I strongly endorse them. The community sector employs more than 60,000 people and delivers a wide range of community services and development activities, mostly in areas of disadvantage and such services would otherwise have to be provided by the State. Significant cuts in funding have been proposed in this sector. The McCarthy report would have a devastating effect on workers, services and communities. It is estimated that more than 6,500 jobs in the community sector would be lost if some of these proposals proceed. I make this point from an investment point of view and I put it to speculators and bankers. For every euro spent on quality child care the State will save €10 on future services and for every euro spent on drug rehabilitation the State will save €3 on other services.

Further, the current crisis of growing unemployment and increased hardship will require the vital contribution of these community development activities and services more than ever before. I raise this matter in the NAMA debate because it is a very important part of the debate. I welcome some of the statements from the Minister for the Environment, Heritage and Local Government, Deputy Gormley, on windfall taxes - another issue mentioned which is very important. If these sensible proposals are put on the table I will keep an open mind in the coming weeks. I will consider the solutions and make a decision based on those. However, the bottom line is that any legislation which goes through the House must have the support and the respect of the taxpayer, the weaker sections of society, the people and the mortgage holders of the country.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I am pleased to have the opportunity to speak on this Bill, which is the most important Bill to have come before the House on economic matters. There is no doubt in the minds of anyone in the House or outside that we must resolve the banking crisis because our future economic progress depends on a functioning banking system. It is clear that at present we do not have a functioning banking system. Banks are not lending money for the very good reason that they do not have it to lend. The bottom line in respect of NAMA is to provide a cash injection into the banks such that they can lend to businesses and private citizens alike. All citizens expect us to resolve the issue and all Deputies agree that the credit crunch is a significant issue. However, there is disagreement in terms of how we go about resolving the bank credit problem.

I put on record my abhorrence, as all other Deputies have done, at the reckless behaviour of some of our bankers who almost bankrupted the country. I wish to see court action come about as soon as possible. I refer to the four investigations currently being carried out by the fraud squad and we all await eagerly the results because the crazy lending policies carried on for a number of years must never be repeated. This side of the House states categorically that the bankers who carried out this reckless behaviour have done this country a great disservice and we wish to see the fraud squad bring about their investigations as soon as possible. Equally, the need for proper and better bank regulation is now more than necessary and I welcome the appointment of Professor Honohan. He has a very difficult job to do but it is very important and it is a job they must do very quickly. I offer him my best wishes, as does everyone in the House.

I back the NAMA proposal as one of sheer necessity. Inaction by the Government is no longer an option. We must take action and we must do so now. We cannot wait as the problems have been compounded by the worldwide problem. The need for the Government to introduce the legislation to resolve the liquidity problem in banks is vital. In introducing the proposals the Government has not simply dreamt them up overnight. It has consulted widely with international advisers and our own best advisers. All the recognised people involved in economics and finance, including the ECB, the IMF and the ERSI have stated they agree with the NAMA proposals and this point has been missed by the Opposition. I regret that Fine Gael and the Labour Party seem to oppose this Bill for the sake of opposing it. The best advice available to them as well as to the Government would inform them there is no other show in town and we must go down this road. Yesterday, Deputy Joanna Tuffy referred to all the newspapers backing the NAMA proposal. They back the proposal for one good reason: there is no alternative. Common sense tells them that doing nothing is not an option. All the professional advisers at home and abroad clearly state that NAMA is the only way forward.

The Labour Party proposal of nationalisation would have major repercussions for the country. The reputational damage that would be done to us if there were three nationalised banks is unthinkable. The damage such a situation would do to our future funding options and to foreign direct investment in the country is equally unthinkable. I reckon every Deputy has met representatives of companies that have come to Ireland and employ many Irish people. One reason they do so is because we are in the eurozone. Another is because we are a stable country with a stable currency. It is ridiculous to suggest that we should go down the road of nationalising all our banks, even on a temporary basis. Furthermore, I am unsure what is meant by "temporary". Is it ten years, 15 years or 20 years? This would put at risk the 200,000 jobs we have in foreign direct investment here. I have no doubt if we go down the route of nationalisation bank lenders throughout the world would stop funding Ireland. There is no doubt our credibility as a nation for future borrowing would be at risk.

We are all aware how much we need to borrow with a budget deficit of some €22 billion this year and borrowing in the region of €60 million per year. We cannot put at risk the likelihood that lenders, be they foreign or any we have here, would pull the plug on the Government. Equally, with nationalisation, the cost of borrowing would increase substantially. When borrowing in the order of €60 million a day, adding extra costs by way of interest payments is hardly an option.

The overall debt will be approximately €77 billion; it may be a bit less or more. If nationalisation came about, the banks would have to write off immediate bad debts. Although I do not know what the figure might be, I suggest it could be a minimum of €10 billion and probably much more. They would have to do this for good accountancy reasons in the same way any private company would have to write off bad debts.

This would have immediate implications for us as taxpayers. The concept of having to pour money in today to prop up nationalisation and writing off those debts does not make sense and I cannot understand how the Labour Party can dream it up. Quite often it has had ideological reasons for opposing Government proposals and Bills but this does not stack up financially, economically or any other way.

Privatisation would undoubtedly cause us, as a nation, to struggle even more to get our economic position back to where we want. If we had three nationalised banks in Ireland, it would undoubtedly lead to branch closures as to have three or at least two different banks trading in every major town, competing against each other, would be ridiculous. It would do away with competition and there would be branch closures, which would bring about job losses.

The only European country that has gone down the nationalisation route is Iceland and nobody in this House would suggest that it is a role model for economics anywhere, least of all in the country itself. It is now endeavouring to join the EU and become part of the eurozone. Regrettably for Iceland, its interest rate is currently 18% because it is outside the eurozone. As we are part of the eurozone we are borrowing from the ECB at a rate of 0.5%. Deputy Gilmore's temporary nationalisation arrangement is an absolute folly.

I will move to the Fine Gael proposals. In 1983, Fine Gael, in government with Labour, bailed out Allied Irish Banks following the Insurance Corporation of Ireland debacle. That cost the State over €400 million so Fine Gael should not be afraid of dealing with banking crises. It experienced such a crisis in 1983 and overnight it introduced emergency legislation so the Insurance Corporation of Ireland would not collapse, and thereby bring down AIB. Fine Gael should reflect on that.

With regard to the good bank-bad bank proposal, I do not have difficulty with putting €2 billion into a good bank in order to lend but I have a major difficulty with the suggestion that the €77 billion of debts should remain in the bad part of a bank. How does Fine Gael think AIB and Bank of Ireland would trade out of those substantial bad debts? In the current climate, I cannot see how it could be done and no financial adviser, international or national, would agree with Fine Gael on that point.

If those bad debts are left within the banking system, Fine Gael would risk the two banks becoming illiquid and there would be major problems with the balance sheets because of the write-offs. If anything, the banking system in the past 12 months should indicate that liquid assets are very important to us as a country.

The retention of the status quo is not an option, although I have heard some Opposition spokespersons suggest this. We must worry about leaving debts in a bank that clearly does not have the resources to work its way out of the problem. With regard to the Fine Gael suggestion that it would dump the bad bondholders, how is it possible to choose one bondholder to pay and ignore another and withold payment? We must think of our international reputation. Which bank would lend us money in future in that case? It would not happen. Everybody knows we cannot renege on our bad debts. We cannot do it privately as we would get into the black book and we certainly cannot do so internationally. We must knock that idea on the head.

The quicker Fine Gael accepts that this is not the way to go, the better. The Taoiseach and the Minister for Finance offered the party the opportunity to meet the officials in the Department of Finance but for whatever reason this option has not been taken up. It is not too late to speak to officials and understand the reasons behind NAMA.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

We will do so when the Minister takes on board Deputy Richard Bruton's nine points. We will happily do so if the Minister is willing to accept Fine Gael amendments on Committee Stage.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

The Minister has repeated his stance that the Fine Gael Party leader was written to and asked to meet the Department officials. Deputy Kenny refused to do so, although it is still not too late for him to meet the officials in the national interest.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

Will the Minister, in the national interest, accept Fine Gael amendments on Committee Stage of this Bill?

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

Deputy Creighton is still playing political football with the issue.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

The Deputy raised the matter.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

She should put on her green jersey in the interest of Ireland Incorporated and get the facts right. Her party should change its tack as the ESRI, the IMF and the ECB do not agree with the Fine Gael plan.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

They disagree with the Government's so-called risk sharing as well.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

It has not been tried in Europe, where countries have the same problem as us, only bigger. Fine Gael should cop itself on and realise that NAMA is-----

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

We should remember who got us here.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

-----the only show in town. I suggest to the Deputies opposite that they listen to their former leader, Mr. Alan Dukes, and another former leader and Taoiseach, Dr. Garret FitzGerald. They might also listen to Mr. Peter Sutherland, a very renowned and respected person in international banking.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

He listened to Fianna Fáil's former leader, Deputy Bertie Ahern. We can see what he got us into.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

None of these people agrees with the Fine Gael proposal.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

It was on Fianna Fáil's watch that all this happened.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

It is irrational and off the wall. It does not make sense economically or any other way. Will the party retract from its position in the national interest and not put out mistruths to the general public that there is an easier option?

I attended a social engagement last night and spoke to a number of business people, some of whom were well-known backers of Fine Gael. Not one of them said that the Fine Gael proposal on NAMA is correct and they all accepted that the Government's actions were correct and necessary. If the Deputies believe they are representing their constituents-----

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

They were probably too ashamed to say they were supporters of Fianna Fáil. Could we blame them?

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

-----I suggest they speak to their own people. They will get a different message to what is being articulated in here.

The Opposition keeps arguing that it will be in government in the near future but I hope, for the country's sake, it will not be. The people will cop on to that.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

The Deputy needs to get real.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

In the context of the Fine Gael's partnership with Labour-----

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

What about Fianna Fáil's partnership with the Green Party?

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

-----which plan would become Government policy, Labour's plan which advocates nationalisation, or Fine Gael's plan which advocates a fantasy good bank-bad bank?

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

The Deputy will discover the answer to that question when the Greens work out the programme for Government.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

Is it not time that Fine Gael informed the public that if elected, it would either agree with Labour in respect of nationalisation or that it would force the latter to agree with its fantasy bank proposal?

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

That is what the Green Party is doing with Fianna Fáil. It is agreeing with all of Fianna Fáil's proposals.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

The public deserves a degree of honesty from Fine Gael. This crisis has shown Fine Gael to be something of a dog in the manger. That party really needs to get a grip in the context of what it is doing and what its members are saying.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

Has the Deputy seen the opinion polls?

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

It is clear that Fine Gael will not be able to put its programme for Government to the public. The banking crisis will not be resolved in the immediate future. It will be several years before it is fully overcome. Honesty is required. Fine Gael should either outline for the people the plan it intends to put in place with Labour or it should retract its various statements and indicate that it supports the Government's plans. It can use the excuse that Mr. Alan Dukes, Dr. Garret FitzGerald, Mr. Peter Sutherland-----

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

We do not need an excuse for anything.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

-----and many of its other branch members-----

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

Good people all.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

----- advised it to take the latter course of action. The Fine Gael branch members with whom I am acquainted in my constituency of Dublin North have informed me privately that NAMA is the only show in town. The Deputies should discuss this matter with their branch members in Clare and Dublin South-East. If they do so, a subtle message will be imparted to them.

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

The Deputy must be hearing confessions.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

What about the opinion polls?

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I talk to all my constituents. If some of them happen to be Fine Gael branch members, I have no difficulty discussing matters with them. I have a reputation for listening to people. I would not disagree with someone purely because he or she might be a member of Fine Gael.

With regard to why Fine Gael should change tack, why, the past day or so, did Moody's issue a report stating that the Government's scheme is the correct route to take? Why do Standard and Poor's and Moody's effectively state that Ireland's credit rating has improved as a result of the Government's plans?

Photo of Paul KehoePaul Kehoe (Wexford, Fine Gael)
Link to this: Individually | In context

On a point of order, I wish to call a quorum. I am fed up listening to the diatribe being offered by the Deputy opposite.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

I call on Deputy Kennedy to resume.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I hope the two Deputies opposite are listening because it is worth noting that in respect of the valuation issue, Moody's has confirmed that the Government's 30% discount is reasonable and accurate. On the 10% valuation, I do not know if Deputy Breen has had the opportunity to read The Irish Times. I suspect it is not well read in Clare but I am sure he could borrow a copy from his colleague, Deputy Creighton to read a piece by Bill Nowlan, who has 40 years experience in the property business and who has confirmed that 10% is somewhat conservative. Mr. Nowlan was speaking in an unbiased manner.

Our major challenge now is to induce banks to lend. All Members want them to lend money to businesses small and large, as well as to private citizens. The Minister should incorporate a clause into the banks' contracts to the effect that when they draw down money, 10% of the first tranche must be offered out to businesses and private citizens before they can draw down a second tranche. A flow of money must be supplied to both the business world and ordinary mortgage business.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

I wish to share ten minutes of my time with Deputy Creighton.

Photo of John O'DonoghueJohn O'Donoghue (Kerry South, Ceann Comhairle)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

I am disappointed that Deputy Kennedy appears to be leaving the Chamber. I wish to let him know, and am sure the Minister of State, Deputy Killeen, will agree with me, that The Irish Times-----

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I am very much in the Chair now.

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

The Deputy should not aggravate him.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I am sorry to disappoint the Deputy.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

At least the Deputy cannot say much when in the Chair as he must remain neutral.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I am neutral in this position.

Photo of Pat BreenPat Breen (Clare, Fine Gael)
Link to this: Individually | In context

He should note The Irish Times and the other broadsheets are widely read in County Clare and the people there are well aware of what is happening. I listened to Deputy Kennedy's speech over the past 20 minutes and international factors are not the sole reason for the difficulties in which we find ourselves. Policy failures by the Government involving reckless spending contributed much to the entire banking crisis. The collapse of Lehman Brothers brought a crisis of tsunami-like proportions to every country. I read recently that there have been 124 systemic banking crises since the 1970s but the latest occurrence is one of the most severe that Members have witnessed. A recent analysis of the American banking crisis in The Economist points out the vital importance played by policy in determining the pace of recovery. This is the reason it is so important to pursue the right policies as otherwise, future generations of Irish people will be obliged to bear a heavy financial burden.

As other speakers noted, the majority of people in Ireland are not in favour of NAMA. A recent MRBI poll published in that famous newspaper, The Irish Times, pointed out that only 26% of people support the NAMA proposal. The majority of Irish people believe it constitutes a recipe for disaster. No matter how one tries to dress it up, people are saying it is a bailout for banks and developers. How can taxpayers have faith that NAMA will work when the administration of the scheme will be conducted by the very people who got us into this mess? The IMF already has observed that Ireland will pay the highest price of any country to bail out its banks. The IMF also has stated that although Ireland's financial stabilisation costs will account for 13.9% of its estimated €171 billion in annual gross domestic product, the cost of bailing out banks in the United Kingdom and the United States will be slightly lower at 13.4% and 12.1%, respectively.

While this debate has raged on in recent months, unfortunately the recession in Ireland has deepened. The latest ESRI quarterly bulletin predicts the economy will continue to contract well into next year and that a modest rate of growth is only expected to emerge in mid-2010. Moreover, by the end of 2010, gross national product, GNP, per head is expected to be lower than was the case in 2002. The recession has taken an enormous toll in every sector of society. More than 430,000 people were unemployed nationally by the end of August, 10,500 of whom live in my constituency of County Clare. Moreover, many businesses in County Clare went to the wall during the summer. Even today, I note the loss of 60 jobs in the manufacturing sector at Beckman Coulter, a company located near O'Callaghan's Mills, County Clare. Although the banks are being bailed out, I believe the Government has little to offer to encourage job creation or to assist other sectors within the economy that are under pressure.

For example, the car industry has experienced great problems in recent months. There have been several high-profile garage closures, some of which took place in my constituency. I cannot understand the reason the Government has not emulated the actions of the United Kingdom Government by introducing a scrappage plan. I hope it will do so as part of the budget later this year. This was done in the United Kingdom and in August, car sales there increased for the second month in a row. I encourage the Government to consider this proposal. In addition to many high-profile job losses, many small to medium-sized enterprises have gone to the wall and many others are merely hanging on by a thread. Every day, people from County Clare ask me whether NAMA will save their businesses and this is the question all Members must ask. Credit flow is the life blood of any economy and in spite of statements from the banks to the contrary, many small businesses are being squeezed because they are unable to secure credit from their banks. I refer to the €54 billion being made available by the European Central Bank. The belief is widespread among Fine Gael members that many commercial banks, which have borrowed money at a rate of 3% and which will now gain access to this money at a rate of 1.5%, will repay their original debts instead of allowing credit flow to customers who badly need it.

I will cite the example of Parnell Street in Ennis, County Clare, with which the Minister of State, Deputy Killeen, also is familiar. Ten businesses have closed there in the past 12 months with the loss of more than 50 jobs and there are 20 vacant premises on that street now. The question must be asked whether NAMA will make any difference to the aforementioned traders on Parnell Street or to other traders throughout the county or nationwide. I concur with Fine Gael's spokesperson on finance, Deputy Bruton, and many other economic commentators that NAMA will make no difference to small business people. Thus far, I believe business people have heard nothing that would restore confidence or give them confidence. On the other hand, Fine Gael's plan to set up a State wholesale operation to fund recovery and the immediate financing of credit is important because it will take at least six to eight months or more to set up NAMA. Under Fine Gael's proposal, a system would be put in place immediately. It would be much like an examinership in that were the banks unable to deal with their problems on their own, the State would then in effect nationalise the good elements of the banks but the taxpayer would not carry the burden for the work-out of toxic loans.

During the summer recess, the reports by an bord snip nua and the Commission on Taxation were published and I hope they will be debated in this House at some stage. However, according to the Tánaiste this morning, most of the proposals will not be implemented. Who knows what will happen in this regard? However, were the reports' recommendations to be implemented in full, ordinary people would be obliged to pay a great price for the Government's mismanagement of the economy. I believe this to be the kernel of the problem.

Many young couples who bought homes at inflated prices now are in negative equity. I recently met a couple who bought a home four years ago when both were employed in Dell; one as an engineer. Both lost their jobs subsequently and now are on the brink of losing their home. The couple have pointed out to me that they are treated in a completely different fashion by the banks than are developers. One cannot blame people for being angry. It was suggested a few minutes ago that Fine Gael should get real. Its members are in the real world but the Government is not. Although the banks failed to establish a true picture regarding many developers when lending funds to them or sanctioning loans, even though major sums were involved, they put young couples under severe scrutiny. There is one law for young couples setting out to buy their first home and another for developers.

There is also significant demand for social housing. There are some 1,978 people on the housing waiting list of Clare County Council. In the period 2002-06, the council's rental stock increased from 990 to 1306, an increase of 316 houses. One can see the extent of the problem facing the council. There is no way it can keep up with the demand for housing, even though a fund of €20 million was announced for a new social housing scheme to provide social housing through long-term leasing of unsold, vacant houses in the private market. Only 2,000 units are available nationally and this will not be enough. I would like to make several other points but I do not have time.

Will credit begin to flow? That is the most important question. How much will the taxpayer have to pay and what substantial bills must the taxpayer pay? Will developers be able to buy back property or land and what is the cost of NAMA?

Photo of Lucinda CreightonLucinda Creighton (Dublin South East, Fine Gael)
Link to this: Individually | In context

I am pleased to have the opportunity to speak on this extremely important legislation. In respect of the gravity of the legislation and its potential implications, it is unprecedented. Having listened to the remarks of some Government Deputies, I must compliment Fianna Fáil on its innovative and creative rewriting of history without batting an eyelid. If we were to sit here and listen to some of the contributions, we would believe that Fianna Fáil Deputies are white knights riding into town to sort out a crisis that has nothing to do with them. Unfortunately, that is not the case and we need some reality in this debate. We need acknowledgement and humility from the Government benches that theirs is the responsibility for the mess this country is in. The buck needs to stop with those who are responsible for the flawed and failed policies that brought us to this position. It is an inescapable fact that a property bubble fuelled by Government policies led to the degree of implosion we see in the Irish economy. I acknowledge international factors and the international recession but there is no doubt that decision making was fundamentally flawed over the past 12 years. This caused the level and degree of collapse in this country. We must recognise the unhealthy relationship between certain developers, certain vested interests and certain Ministers. They were intoxicated by a champagne fuelled relationship in the Galway tent and elsewhere, leading to flawed and dangerous decision making and policy setting at Government level.

The Opposition benches can agree that we urgently need a solution to the banking crisis. I will not disagree with any Government Member who says that the Irish economy is inextricably linked to the Irish banking system. Whether we like or not, we must find a solution to the banking crisis. We need a plan to restore confidence and to restore international investment in this country. We have no alternative. I will not subscribe to some of the catchcries I have heard from the Government benches and the Independent Deputies shouting from the rooftops about bailouts.

We must also examine the context in which this crisis arose. We must examine the irresponsible lending of the banks and the loan book of the Irish banks that will be addressed by the proposed legislation. Some €68 billion was the total sum loaned by the Irish banks involved, 66% of this in Ireland and the remainder in Northern Ireland, the UK and the USA. Discussions that focus on the conditions in Ireland are relevant only to two thirds of the total loan value, approximately €51 billion. Anglo Irish Bank, which is now in State ownership, accounts for 30% of the total lending, while AIB and Bank of Ireland account for a further 60%. This level of lending was reckless and irresponsible. From the Government's response over the past 12 months, it appears that this behaviour is without consequence or reproach. That is the crux of why Irish taxpayers and honest to goodness Irish people are so angry. They do not see any culpability for behaviour in these banks. This is not good enough. NAMA provides a safety net for reckless, irresponsible behaviour on the part of these banks, speculators and for certain politicians who facilitated this and turned a blind eye. In some cases they formulated policies to support these practices.

We are not here to discuss Fine Gael proposals, we are dealing with the legislation at hand. I accept that Fine Gael must now deal with the legislation. I am not afraid to don a green jersey in order to find the best solution for Irish taxpayers. I hope the Minister for Finance, for all his rhetoric, bluff and guff, will be man enough to don the green jersey and accept amendments from this side of the House on Committee Stage. That opportunity will be presented to him.

NAMA represents the most significant risk ever taken in legislation in the history of the State. The most important aspect is the extent to which the taxpayer will be exposed, particularly in respect of the non-Anglo Irish Bank debt because that bank is State-owned. We cannot know the extent of taxpayer exposure but we can work to minimise it. That we do not have clarity is a serious indictment of the Government. The Government should remember that its responsibility is not to bankers who believe they can act with impunity, nor is it to developers who overextended themselves, irrespective of how friendly they are with particular Ministers. The only responsibility of the Government is a duty of care to the Irish taxpayer who did not take any risks, did not act in a reckless manner and did not put the welfare and future of fellow citizens in peril, as many bankers and developers did.

The introduction of a 95% level of exposure to taxpayers has been aired in the media in recent weeks. This is not good enough, representing a 5% risk for bondholders who took a deliberate risk and put their heads above the parapet. It cannot be conceived of by any right thinking person as just or fair. It is simply not right and the Government must address this by amending legislation to reflect the risk people took and to reflect the fact that ordinary taxpayers did not voluntarily take any risk and did not stand to gain had the risk worked out. Taxpayers would not have benefited from it whereas the speculators and the bondholders would. That is an important point that is not reflected in the Bill.

The 30% discount on loan value is equally disappointing. We are still waiting for explanations from the Minister on this. The rising costs are not factored into the legislation or into any of the explanations offered by the Minister. Deputy Bruton has pointed out that this is a potential black hole in the financial estimates of €10 billion. We have no evidence of supporting documentation. As Deputy Bruton pointed out last week, no risk analysis has been carried out.

I would like to discuss many other aspects of this but I do not have time. Whatever scheme forms the basis of a solution to the banking crisis - and we need a solution to the banking crisis - it must ensure that the banks start lending again and that must be the key objective. It must protect the taxpayers and ensure that liquidity is restored to the banks. I have serious concerns about bailing out an institution such as Anglo Irish Bank which quite clearly will never lend again. It is inexcusable.

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

Some critics of the National Asset Management Agency Bill argue as though the legislation has all of the risks and that no risk whatever attaches to the option of doing nothing. A positive development in the debate in the House over the past week has been a much clearer focus on the need to take action and on the risk of doing nothing. However much political parties might disagree - Fine Gael has put forward its own proposals and the Labour Party has it own ideas on how matters should be addressed - one consensus is emerging, which is that the risk of doing nothing is the worst of all worlds. It is possible that if nothing were done the banks would limp along unable to support any commercial activity, which unfortunately to a huge extent is the case at present, or ultimately and perhaps very likely in the case of one institution, collapse entirely.

One of the improvements in the debate that must be acknowledged is that people have come to realise that the State cannot function properly without a properly functioning banking sector. Even at the level of the ordinary citizen who is not centrally involved in any type of commercial activity, people have come to realise that if matters were to continue as they are it would not be too long until each of us would run the risk of having a plastic card that would not perform when one went to an ATM. That is putting it at a low level in terms of the ordinary consumer. In terms of commercial activity, the difficulties which have beset the banking sector here and internationally have made it extraordinarily difficult for businesses, which have no connection to any property transactions or bank shares, to function in any sensible or workable manner.

This country is small with a free open market economy and it is not always acknowledged that this approach has brought enormous benefits to the country. In a very short period we went from having approximately 1.1 million people employed to having 2.1 million people employed. This is very close to a doubling of the number of people employed. While this has dropped to approximately 1.9 million people, it is still a huge advance on our initial position. In the midst of all the doom and gloom and very real difficulties which beset the economy and individual families where jobs have been lost and young people have gone through college or apprenticeships and are not in a position to get employment, we forget that as a nation we have a great capacity to manufacture goods and provide services to an extraordinarily high standard. There are a number of reasons for this.

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

On a point of order, as there are fewer than 20 Members are present we are not quorate.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

I ask Deputy Killeen to resume.

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

I was making the point that is infrequently made in the context of the difficulties internationally and the difficulties we face in this country that Irish people have a particular capacity to provide goods and services to an extraordinarily high standard. It is important to remember we export approximately 90% of most of the goods and services manufactured in or provided by this country. In the case of some agricultural goods, the percentage is in excess of 90%. In light of the kind of challenges we face in the banking sector and other sectors of the economy, it is good to remember we have that capacity.

We have an extraordinary record of success in regard to foreign direct investment and international capital flows are clearly very important to that. There is no doubt NAMA or some such device was necessary to ensure international capital flows could continue and that foreign direct investment, already in the country and accounting for almost 100,000 direct and mostly highly skilled and highly paid jobs, can continue and to ensure we have the capacity to attract further opportunities of that nature. In terms of job creation and economic stability, the banking sector, regardless of what one might think about the behaviour of some people in it, plays a central role. The point I made initially was that more people have come to realise that is the case.

Many speakers rightly referred to the fact that many of our citizens are very angry. People have a right to be angry. Some of the things that happened were entirely unacceptable. A question people ask each one of us - they certainly ask me - is: "How come the regulatory system was not up to the job?" There are a couple of points to remember in that regard. It is very clear the regulatory system here performed pretty much on a par with those throughout the world and that regulatory systems were not able to deal with the challenge they faced.

One of the outcomes of this particular chastening lesson for all of us must be that we put in place a system of regulation which is capable of doing that job. That is one of the things about which citizens are angry.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
Link to this: Individually | In context

What happens if they do not want to regulate?

Photo of Tony KilleenTony Killeen (Clare, Fianna Fail)
Link to this: Individually | In context

I am grateful to the Deputy for trying to help me with an extraneous matter.

Another question people frequently ask is how it is possible to invest money in the banks at a time when investment must be cut in many other areas, including services and so on. Gradually, as the debate has advanced, people have come to realise that while all elements of an economy are interconnected, the provisions being made in the NAMA legislation, specifically to rescue the banking sector and to ensure we have a working banking system, are being done through a system which operates independently of the national finances. The figures put forward by the Minister for Finance last week show very clearly that NAMA is so designed not to be a burden in that regard. The question of dealing with services and the national finances is a somewhat separate one and is also very difficult to address.

It is frequently believed, and not adverted to, that bondholders, for example, suffered no losses in the banking crisis in Ireland up to now. The reality, which may have been pointed out by the Minister, is that they have lost in excess of €4 billion in very recent times. They put their money in and there was some risk. Ultimately, if the Irish banking sector was seen as a complete basket case which could not be depended on, it would be impossible for the banks to attract any kind of finances and bondholders and others who normally lend to the banks would not be prepared to do so. That is why it is very important at this point that the banking sector is put back on a strong footing.

Bank shareholders, many of whom purchased their shares for €20 or, in some cases, the high twenties, found them dropping in value to less than €1. Shares in the two main banks are now worth approximately €2. It is tempting to say shareholders had much spare cash lying around, that they were taking a punt and that was the risk they took. Anybody who saw the coverage of the annual general meetings of the main banks cannot but have noticed that the vast majority of shareholders attending were elderly people who had worked hard all their lives and who had put a certain amount of money into bank shares in the belief that their pensions or, in some instances, a top-up for their pensions would come from that source. The distress caused to those people was certainly very evident.

Some of the bondholders investing in banks in Ireland are pension funds, including non-Irish pensions, although many are Irish pension funds. That has had the same impact on elderly people. Therefore, some of what has been represented in regard to the losers in the banking sector is entirely inaccurate and quite unhelpful in terms of trying to address the situation.

It is important the banking sector is able to operate in such a manner that it is capable of lending to business and of generating jobs and activity in the market. There are some signs of green shoots in the US economy and there are certainly modest signs of recovery in at least two European economies. There are pretty encouraging signs in regard to Irish export figures. What we tend to forget in regard to export figures is that regardless of how high a standard to which one may produce one's goods and services, one needs a market into which to sell them and it must be able to pay for them. When economic depression and difficulties are being experienced pretty much worldwide, it is very difficult to do that and competitiveness and other issues come into play. However, there are some positive indicators. A functioning banking sector is vital to ensure we can build on the fairly encouraging export figures.

It is important to consider the fact the International Monetary Fund and the European Central Bank support the NAMA plan because if they did not, this legislation could not be considered since most of the borrowing required to sustain the banks over the next ten years or so will come from the European Central Bank. In the run up to the referendum on the Lisbon treaty on 2 October, it is important to remember the ECB is supporting Ireland in its time of need. There is no doubt that the European Union has been good for Ireland in terms of access to markets and so on. In a time of difficulty in the economy, it must be acknowledged that the ECB is playing a very central role.

One of the interesting developments of recent months, even in advance of this legislation, was the response of the market to the willingness of the Government to address the difficulties and the drop of 1.5% in the cost of ten year State borrowing, which is very significant in terms of the kind of challenges we face.

There is no doubt that the drop in receipts from taxation from approximately €60 billion per annum to approximately €33 billion or €34 billion will have to be bridged, to a very large extent, by additional borrowing. It is important we can access that borrowing and get it at the best rate possible.

We need to reflect on the fact that cheap credit and inadequate regulation were global factors, as was very clearly shown by the collapses of Lehman Brothers. Some people ask: "Why not let several Irish banks collapse?" The collapse of a bank in the US has quite different implications from the collapse of a bank in a small open economy which must do up to 90% of its business abroad. The kind of message that would send would be devastating for the Irish economy - even if a bank like Anglo Irish Bank had collapsed. Many of us deep in our hearts would have liked to have seen that outcome but we knew it was not feasible and that interventions had to be made to ensure it did not.

The income stream to banks dried up and they were no longer able to lend or function. That has been a common occurrence pretty much across the western world. Simultaneously, property values inevitably collapsed. Even if there were willing purchasers, which there were in some instances, they were unable to access finance.

I referred to competitiveness. A substantial element of competitiveness is the capacity to access bank lending and the cost at which it is available. This element of doing business is very important and can only operate when there is a functioning banking system.

One element of the Government bank guarantee scheme introduced in September 2008 that was overlooked by many including the media was the charge in excess of €1 billion on the banks for the guarantee. At the time the one question all Members would have encountered from constituents was whether their savings were secure. Even though it was only a year ago, that question was exercising the minds of a great many ordinary people. The bank guarantee got over that difficulty. At the time the guarantee was seen as a drastic and unusual step because it has not been introduced in other European countries. Other governments subsequently introduced similar schemes resulting in the dissipation of the inflow of funds into Irish banks which had occurred immediately after the guarantee was introduced. This is also another reason more long-term action, such as this legislation, needs to be taken.

It is important to remember that several variations of the NAMA model have worked successfully elsewhere. Variations arose because the problems to be addressed were somewhat different. In the case of Credit Lyonnais, there was a large insurance element hanging over its problems. In Sweden's case, slightly different challenges had to be faced. The basic model, however, worked successfully in all the cases. NAMA is much more than an issue of bank guarantees. It is an asset management agency which involves capitalisation and property portfolio management.

Taxation policy is often blamed for the emergence of the property bubble. The impact of taxation policy on development was modest compared with the availability of cheap credit, high wages and high rates of employment. It must be remembered that other countries had property bubbles too with similar factors involved. If any government intervened in the property market place or tried to reduce wages, it would have seen a considerable and immediate drop in employment in the construction industry. While I accept it occurred eventually, if it had happened earlier in Ireland it would have cost the country a huge amount, particularly when one considers 280,000 people were directly employed in construction.

Another question which has caused some difficulty and debate is how much should be paid for the assets in question. We have all been forced to become experts in this in a short time. Several weeks ago I saw a report from an international economist who claimed it would be better to do nothing rather than pay too little. He argued the effect of paying the notional amount at which banks are valued would in the first instance cripple the banks, leaving them unable to lend to business. Such a move would also mean the recapitalisation of the banks would become an immediate charge on the taxpayer. Such a charge could not be found from the sources from which NAMA could provide and would be a direct debit on the State at a time when it is an enormous challenge to meet the costs of public service provision.

We tend to forget the Bill contains a provision for a levy on the banks if NAMA happens to be in deficit at the end of its term . This is an important provision and I expect it to be enabled in the legislation. It will be the call of the Government of the day as to how it may happen. Confidence in the legislation is increased if there is a fund from which any losses might be recovered.

All that is required in the next ten years is an increase of approximately 10% in the current level of property values. Considering increases in the past ten years have been in excess of 250%, this is a not a large asking. It is not even a requirement that property values return to the levels they were at in 2006. If they come to within 45% of 2006 values, they will reach a sufficiently high level to enable NAMA to clear its debts. There is a reasonable expectation that property prices will do much better than that.

After the legislation is enacted, we need to follow up quickly to ensure the banks function properly and credit is made available for business. We must also ensure the regulatory shortcomings discovered are addressed for the future.

Photo of Shane McEnteeShane McEntee (Meath East, Fine Gael)
Link to this: Individually | In context

I wish to share time with Deputy Bannon.

Photo of Michael KennedyMichael Kennedy (Dublin North, Fianna Fail)
Link to this: Individually | In context

Is that agreed? Agreed.

Photo of Shane McEnteeShane McEntee (Meath East, Fine Gael)
Link to this: Individually | In context

The establishment of NAMA will affect everyone. If any Member on this side of the House believed it was the right approach, they would back the Government immediately. However, it is not.

I joined the workforce, aged 15 years, when we joined the EEC and since then have watched the country slowly progress. We have stopped going to other countries to build their infrastructure and now build our own. It is fantastic to see how our cities, towns, roads, education and quality of life have progressed.

However, two years ago we knew that such accelerated growth rates as we had recently experienced could not be sustained. Wages and prices were out of control and a crash became inevitable. What annoys me more than anything is that we allowed ourselves get stuck in a property pyramid selling scheme. Ludicrous prices were paid for property. It was not good enough to buy land and build property on it. It had to be sold on again shortly after it was bought for a profit. Eventually houses were built on it. In County Meath I recall land being sold for €11 million which was then dickied up with a bit of planning permission. Six months later it was sold again for €17 million.

I do not mind supporting businesses. Ireland has some of the best builders but there are cowboys too who will get away with it through the NAMA legislation. Fine Gael's alternative to NAMA is a good plan. I have been lobbied more than any other Deputy by people in the building industry to support NAMA. It is very easy to support 1% of the community but what about the other 99%?

All Members are receiving the same complaints about the banks. I heard the case today of a farmer who employs seven people being told recently by his bank's agricultural adviser to plant his brussels sprouts crop for the Christmas market. When he had it done at a cost of €900,000, the bank informed him it could not provide him with a credit facility. The day before a constituent from Kells rang me about his situation. He and his wife were earning €2,500 a week but when they lost both jobs their income went down to €480 while they still had to pay a mortgage of €3,500 a month. The bank brought them to court and sent the sheriff to collect €6,500 worth of property from the house. The only things he had were his beds and two ponies for the kids. That is not the Ireland we were brought up to believe in. That is where the injustice and immorality is.

I was delighted to hear the Minister for Transport, Deputy Noel Dempsey, who is from my area, call it as it is. Not alone are we taking on the loans, we are taking on the property. We legislators are buying this property on behalf of the people. How can anyone justify paying the price the Government is paying for this land and land abroad? The cowboys bucked everyone who took out a mortgage. It was not good enough to do it to their own people but they had to go to Poland, Bulgaria and America and do the same. We are left with their mess. The bankers who gave them the money - not my local bank manager but those at the top - creamed it, because for every €1,000 they loaned they received a bonus. They sold money to others within the banks to buy their own shares to keep the prices up.

The people will not let us get away with this. Nobody is doing anything for those who have mortgages for €300,000 or €400,000. One by one small businesses in Duleek, Navan and Drogheda are closing. They cannot pay rates, VAT or PRSI. That is what I find disgusting. We sat back and allowed pyramid selling. While I appreciate that people do not want to spend money on inquiries there should be a full inquiry. A plot of land in County Meath was sold one day for €11 million and six months later made €17 million. Other lands were sold three and four times before a builder put a house on them. I could not believe it when I heard of one bank, I think it was Irish Nationwide, giving money to a man to buy land in a deal under which it was to get back some of the profit on the land but then gave the money to an unfortunate young married couple who are now stuck with the mortgage.

There is a theory in this House that Fianna Fáil is backed by builders but Fine Gael is against them. We are not. Ninety per cent of builders are great but the cowboy builders and bankers are getting away with this. That is why I am totally opposed to NAMA. It will not work. As the Minister for the Environment, Heritage and Local Government, Deputy Gormley, says, we have had 74 years of zoned land. How can one value land that has been zoned for 74 years in Dundalk? It is not worth €5,000 an acre. Thirty per cent of the buildings in the country are lying idle. This is what we are taking on. NAMA cannot work because there is far too much money involved.

I was disgusted when we on this side of the House were told that we offered no options. When Deputy Bruton made his speech last week in which he explained what he wanted done, with a mix of ideas, everybody on the Government side walked out, as if they were programmed to believe that there is only one way, Deputy Brian Lenihan's way, and no other. There are other ways. Everyone has good ideas. Deputy Brian Lenihan's way will not work because we have overstepped the mark in the amount we paid for property. My children and grandchildren will pay for it.

It is not possible to have people involved in a business such that land that should have been sold for building was sold three times on at massive profits. These people were not even builders. We stood by and let it happen. We knew it was happening. Every Deputy in the House hears the same complaints. If the Green Party backs NAMA it will be extinct, like the dodo. It cannot back NAMA. Anyone who lives in the real world knows what has happened. It was savage, cruel and wrong. I respect our ex-Taoiseach as a person but his statement in Donegal that people should go and hang themselves was wrong.

The warning was there. It took a long time to get this country to where it is today. Ninety-five per cent of our builders are good builders but the other 5% whom we are backing are cowboys. It was grand to buck the Irish. Then they left the country to try to buck the poor Poles and the Latvians and start the game again. Now we have to buy property in these countries for which we have no regard and we do not even know what will happen.

If the Green Party wants to be like the dodo it will vote for NAMA. All the Fianna Fáil Deputies are hearing the same complaints as me, from small businesses and farmers. Last week I went to the bank to try to get a loan with my daughter. The banks will lend only to students now, anyone can check the records.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
Link to this: Individually | In context

Yes, that is right.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

This is probably the most important debate we will ever have in this House. My sense that I am participating, however unwillingly, in the greatest gamble in the history of the State is mind-blowing. We have all heard of the great confidence trickster immortalised in song as "the man who broke the bank at Monte Carlo". We are now seeing the man who broke the Irish economy attempting to hedge his bets in a similar fashion with no guarantee of success or even luck.

Gambling with other people's money is shocking in any context. Gambling with the money of 4.3 million people, many of whom exist below or just above the poverty line, is horrifying. These people would be unwilling participants in what could be the financial disaster to end all disasters if NAMA goes ahead in its present form. Unless some Government Members come to their senses it will go ahead by sheer weight of numbers and a few will be protected at the expense of many. I am disappointed that there are no Green Deputies in the Chamber this evening to listen to what people on this side of the House have to say. They will walk in blindfolded to vote with the Government on this issue and the people will walk them out of office at the next general election.

While I do not wish to use unparliamentary language, a cartoon in a recent issue of a well-known magazine depicting the Minister for Finance saying "Screw the public and save AIB" sums up the public's opinion of NAMA which leaves many people feeling disenfranchised and helpless. Three quarters of the Irish people either reject NAMA or doubt that it can solve our financial difficulties. For many there is the real fear that their lives will be financially ruined by one tax and levy after another, not to get the country back on its feet but to bolster the position of banks, property speculators and the grasping beast that devoured the wealth of the Celtic tiger. They fear that those who attacked the foundations of this State for their own gain will be bailed out once again to the detriment of hardworking taxpayers. They fear a repeat of the cronyism that was and still is rife in Fianna Fáil, and that brought the country to its knees. This was the cronyism born in the Galway tent where the power and confidence of those same developers and speculators led them to claim they had more influence on Irish politics than Ministers have. Alarm bells are ringing throughout the length and breadth of this country and trust in the Fianna Fáil-Green Party Government has declined greatly.

The frightening signs of the double whammy that is about to be unleashed on the Irish taxpayer represent not only a betrayal of trust but a confidence trick by the Government that exceeds all others. While taxpayers worry about paying for the crippling debt NAMA will impose on them, the very banks they will assist are, with Government collusion, lining up to stab them in the back by way of higher costs and interest rate hikes in the offing. This is already happening. Yesterday one heard reports that interest rates will rise again. There is no end to the Government's duplicity on this.

How many Deputies sitting on the Government benches can look their constituents in the eye and assure them that NAMA will be a fair and open solution to the financial mess their Government got them into? How many can explain why some of the best economic brains have come out against it? How many will vote for the good of their constituents and their country rather than shore up the Fianna Fáil and Green parties?

We must consider how this will bear on our population. Will the bankers and speculators plough money into repayments to make good their debt to our society? I think not. It is historical fact that Fianna Fáil Governments attempt to make good their losses on the backs of the poor of this country. This occurs, while those responsible for massive financial meltdown escape to prosper again after a short period. The poor get poorer and the balance of power remains with the wealthy, the grasping and the corrupt. I wonder just how many Fianna Fáil Deputies will benefit from NAMA because I know many of their card-carrying members up and down the country will so benefit. This is scandalous and disgraceful.

It is shocking to note that figures for 2007, the most recent statistics available for salary scales in this country, show that in that year 33% of employees earned less than €25,000, namely, just under 500,000 workers. Given the impact of Government mismanagement of our resources, we know that figure has risen dramatically in the two years since these figures were compiled. The Minister should balance that statistic with the demands now being made on lower earners whose wages are just over the poverty line. Those earning as little as €15,000 are being asked to give up what they cannot afford to bail out the banks and the dodgy developers, although "asked" is the wrong word - "forced" is more apt.

This legislation has as many holes in it as a small child's knitting. It is full of dropped stitches, and is of grubby appearance and sticky texture. Like the small child who asks us to believe that all will turn out all right in the end, the Government assures us it can be trusted on this and will produce the goods for us. That trust is noticeably absent across the country. When over three quarters of the population have no faith in NAMA, where does that leave a Government that still insists on pushing the legislation through by sheer force of numbers? That is if those numbers are there at the final hurdle. If the Green Party has any guts it will walk away.

Speaking of numbers, this legislation is not the product of the Taoiseach, the Minister for Finance and the Cabinet working in conjunction with the best economic brains in the country. It results, rather, from the extraordinary decision of the Government to rely solely on the judgment of one man. This is the man who is calculated to send shivers down the spines of every man, woman and child in my own county of Longford. When he was asked to produce a strategy report on the economic development of the county, Dr. Peter Bacon earnestly assured us that one of the major problems for County Longford was that it was under threat from serious coastal erosion.

How can the Taoiseach or the Minister for Social and Family Affairs expect this country-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

The Deputy has one minute remaining.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

Leave him be.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

-----to have confidence in the proposals of a man who is unaware that County Longford is firmly located in the heart of the country? It is the most landlocked county in Ireland and although it is under threat from governmental neglect, County Longford certainly has no fear of coastal erosion. However, it seriously fears and distrusts the judgment of Dr. Bacon and the Fianna Fáil-Green Party Government. On the Fianna Fáil side the county has the most incompetent representative who has let several services die over the past two years.

Dr. Bacon's contention that the error regarding Longford was due to "cutting and pasting" very aptly sums up the NAMA legislation which is cut and pasted into a patchwork solution, that changes-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Go raibh maith agat.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

-----according to the pressure put on the Government and the knock-on effect regarding its survival. It is the latest in the knee-jerk reaction-----

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Go raibh maith agat, a Theachta.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

-----school of crisis management. I am glad that the Minister for Education and Science is present to hear that.

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

He is not here.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

We all know the way she has let down students, parents and children-----

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

The Deputy got that wrong.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

-----throughout-----

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

The Deputy means the former Minister for Education and Science.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

The former Minister for Education and Science, who let down students, parents and everybody.

Photo of Mary HanafinMary Hanafin (Dún Laoghaire, Fianna Fail)
Link to this: Individually | In context

That is just about as accurate as everything else the Deputy said today.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

The Minister, Deputy Hanafin, is the person who let everybody down.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

I now wish to call Deputy Cyprian Brady.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

Now she is letting down the poor, the sick and the elderly and the most vulnerable in society. I am not afraid of you; I can tell you that, Minister.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Deputy Bannon should address his remarks through the Chair. I call on Deputy Cyprian Brady.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

Obviously the Opposition knows it is on a losing game at this stage if those are the antics it produces. I wish to share my time with Deputy Charlie O'Connor.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Agreed.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

I listened with great interest to the debate on NAMA in recent days. If there is one continuous theme, on both sides of the House, it is that doing nothing is not an option. People may cast their minds back - although we have had much selective memory in recent months - to as early as last December when the Taoiseach produced a document entitled "The Smart Economy", a plan for sustainable recovery. It contained a great deal of detail about how we must use the assets into which we have invested considerably over recent years. Those assets are our people. By investing in the areas where we have experience and expertise we can ensure that we continue to compete and will come out of the current situation.

The introduction of NAMA will make a great difference to how people do their business in banking, development and other businesses in this country. The blame game that is being played by the Opposition and other commentators outside will not solve anything and will not save a single job.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

Is the Deputy one of the Drumcondra set-----

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

As the Deputy is aware, as a small open economy-----

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

-----that ruined our economy?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Allow Deputy Brady to make his contribution.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

As a small open economy, we are open to international changes, especially in the globalised environment in which we now find ourselves. We must ensure we are flexible and tough. Although this crisis is having a difficult effect on jobs, on business and on the budgetary system, one good thing may come of it. Even when we suffer because of issues outside our control, because we have invested in education and training in recent years, we will cope and will emerge a stronger and more resilient economy. Over the past ten to 15 years we invested significantly in training, education, and as the Deputy pointed out, the former Minister for Education and Science, Deputy Hanafin, played a considerable role in improving our education system in this country.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

Everywhere.

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

Especially Tallaght.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

The details of NAMA have been discussed thoroughly in this debate. In my few minutes, I wish to concentrate on how the proposal will affect the everyday life of ordinary people. As Members on both sides of the House will be aware, parents and schools encourage young people to open savings accounts from a very early age.

Photo of James BannonJames Bannon (Longford-Westmeath, Fine Gael)
Link to this: Individually | In context

We could do a whip-round.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

In post offices, credit unions, building societies and banks throughout the country, young people put in their few bob every week or month to have access to funds when they need it. The vast majority continue that practice into their adult years and on into their senior years. I refer to parents supporting their children by helping them with obtaining a mortgage. As a result of what has happened, any confidence people had in financial institutions has been damaged, whether those are institutions at home or abroad. As the incumbent Government, our job is to restore that confidence. That is the reason NAMA is being proposed. It is not for builders, developers and bankers; it is for the ordinary people of this country. There are hundreds and thousands of accounts, mortgages, standing orders etc. in banks and building societies around the country where every day ordinary people do their business. This is what NAMA is protecting. We are protecting the small, medium and large businesses, shops, factories and offices who depend every week on banks and building societies to do their business, to provide jobs and to provide incomes for people.

The Minister for Finance explained the legislation to the House in great detail. Given the figures announced by the Minister, the key to NAMA is that if property prices increase by just 10% over the next ten years, NAMA will break even. We will be able to go back to the country in the knowledge that we have produced a system and a programme which has ensured that the taxpayers of this country have not lost any of their resources. The Minister pointed out that we are now at the bottom of a cycle. The property market in every country in the world has a cycle of troughs and peaks and this must be accepted. In my view, we will make a profit from NAMA. There has already been a sharp increase in the banks' share prices since they were recapitalised last year. Those shares will yield a significant profit for the taxpayer when they are sold.

I have been out canvassing for the Lisbon treaty referendum over the past couple of weeks. It is understandable that people are angry and disappointed. They believe they have been let down by institutions such as banks and building societies. There has been a breakdown in trust. Those who have done wrong need to be brought to account but we also need the banks and a financial system in order for the country to function properly.

I commend the bold move in introducing the State guarantee for deposits. This measure was opposed by some Members of the House. This move was made decisively and quickly and it brought us back from the brink of a very serious situation. Other European countries and other countries around the world have followed suit with their own state guarantees. The NAMA plan, which has been endorsed by the ECB will, despite what the commentators say, bring liquidity back into the system and will ensure that those people who-----

Photo of Arthur MorganArthur Morgan (Louth, Sinn Fein)
Link to this: Individually | In context

On a point of order, I wish to call a quorum.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
Link to this: Individually | In context

Deputy Brady has two minutes remaining.

Photo of Cyprian BradyCyprian Brady (Dublin Central, Fianna Fail)
Link to this: Individually | In context

The Minister for Finance has stated in his contribution that economic recovery is dependent on three factors. The first is to get the public finances back in order and some progress has been made in this regard. The second factor is the restoration of our competitiveness and the Minister for Enterprise, Trade and Employment, has introduced a number of different schemes which are aimed solely at increasing our international competitiveness. The final ingredient is a healthy financial system. The steps being taken in NAMA are critical to ensure that we continue to function as a country. There will be tough but necessary decisions. The Government is trying to repair the damage done to our financial system and to the country's reputation and NAMA will help in this process.

NAMA is not about developers or bankers, rather it is about the Irish people and ensuring that those people are guaranteed that their savings, mortgages and standing orders are protected and to provide that Ireland continues to function as a progressive and modern country.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

I welcome the opportunity to make a brief contribution to this important debate. I will speak quickly in case the bells go again. I note that my colleague from Longford mentioned his county a few times in his contribution so if I mention Tallaght and Dublin South-West the odd time I am sure I will be forgiven.

Photo of Kieran O'DonnellKieran O'Donnell (Limerick East, Fine Gael)
Link to this: Individually | In context

We would be disappointed if the Deputy did not mention them.

Photo of Charlie O'ConnorCharlie O'Connor (Dublin South West, Fianna Fail)
Link to this: Individually | In context

I have to say where I am from.

My seven year old granddaughter, Heather, asked me this morning very seriously: "What is NAMA about?" I told her to ask her mother. Many views have been expressed on all sides of this House during this debate about what NAMA is, what it means and what will be its consequences. Deputy Cyprian Brady and others have made the valid point that the biggest risk of all would be for the Government to do nothing and for the economy to stagnate even further.

I notice tonight that the news bulletins are not talking about NAMA because the McCarthy report has suddenly become the news item of the day. I am sure that in the context of this discussion it is all right for me to refer to this because people are talking about McCarthy and the cuts it recommends. It is relevant to this debate and everyone, including myself, has a view about what the Government should do.

The McCarthy report was given to the Government and we all have an opportunity to make our views on it known. The Government is considering all its recommendations. At every political level, the McCarthy report should be treated with respect. I have very strong views about what should be touched and what should not. I am glad the Minister for Social and Family Affairs, Deputy Mary Hanafin, is in the House. I wish her well. She knows that Fianna Fáil must continue in government to do what it has always done, that is to look after the vulnerable, the elderly and the carers. Not every Government can say it does that. The Minister is entitled to all our support, as she rises to that challenge and does her best in that regard. She will know that people, throughout the country and certainly in Tallaght, are concerned about the situation.

I am old enough to remember other recessions and what they were like. Like others I had to emigrate, as did my father and my grandfathers. I am glad I survived and came back although not everyone in my constituency is happy that I did so. I have often said - and I was not looking at George Lee's picture when I did so - that I emigrated simply because I could not find a job. I was not aware of the difficult financial situation the Government faced at that time. Nowadays, through television and other media, we get information almost before the Government releases it. Maybe that is not a bad thing. Nevertheless, it adds to people's frustration and concerns. It certainly adds to their anger.

I have been out and about in Tallaght talking to people and convincing them, I hope, that the Lisbon treaty is important. People are sharing with me the same concerns that are being expressed in Galway, Wexford, Dún Laoghaire, Drumcondra and all over the country. The issues are the same.

With all the talk about pain and adjustments, it is important to remember the word "recovery". In my constituency, for example, jobless figures have risen by 87% in the past year. That is a serious challenge for the third largest population centre in the country. The anger and frustration which has been expressed to colleagues has also been expressed to me. People are worried about their mortgages. People have different views about what NAMA will achieve. The ordinary people are saying they want reassurance from Government that if they get into trouble with their mortgage there will be a light at the end of the tunnel and some kind of help. The standard profile of a social welfare recipient has changed in this recession. There are people in my community and every other community having to go to their local social welfare office or community welfare officer who never had to do so before. It is essential that Government show signs of recovery, as far as that issue is concerned, and assures our citizens, whatever their political persuasion, that there is a way forward, that there is light at the end of the tunnel and that every effort will be made to continue to invest and create jobs and confidence. People have a list of things which they want done but the words "jobs" and" recovery" are high on that list.

I will listen very carefully to what colleagues are saying. I will not engage in politics and upset colleagues across the floor, particularly those who are normally amenable to my points of view. However, some of the remarks made are not in the national interest. I do not expect everyone to support the Government but surely views can be expressed reasonably. At a time of recession when there is a need for national recovery, we should all come together in some way and use the good ideas which are coming forward. Some of the speeches have been unnecessarily over the top politically in a time of national crisis. I hope that good ideas, whether from Fianna Fáil backbenchers or Opposition speakers, will be incorporated in the legislation. Colleagues have made the point that the debate on Committee Stage will be very important. The Minister for Finance understands that this is a time of national challenge and that good ideas are coming from both sides of the House. There are also some crazy ideas but let us concentrate on the good.

People are deeply concerned about NAMA. The Taoiseach has said the next 100 days will be critical for the future of the country. We all hear about the importance of the Lisbon treaty, NAMA, the budget and the negotiation of the Government programme. The public are confusing those issues. Maybe we need to calmly take one issue at a time. There is still a need to get a positive message across about the National Asset Management Agency Bill. There is still a job to be done in that regard. There is considerable confusion and this leads to anger. It is important that this debate send out a positive message that something is being done, that someone is in charge and that there is a way forward.

I do not need to defend our partners in the Government but I notice they are getting much criticism, some of it snide, from the Opposition benches. I wonder what that achieves. The Government is trying to do a job and we all have a responsibility to represent the concerns being expressed to us. People are saying the same things to me as to Deputies Pat Rabbitte, Brian Hayes or Conor Lenihan.

I had to go to Tallaght last night and was not present when my colleague and good friend, Deputy Pat Rabbitte, raised the issue of the jobs initiative programme. We both attended a recent meeting on this issue in Tallaght. People are very concerned about the threat to the jobs initiative programme. I see no point in taking people off the programme, putting them on the dole with nothing to do and depriving communities of good works. I support what Deputy Rabbitte said in that regard.

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
Link to this: Individually | In context

When I resume my speech tomorrow, I hope I will be able to begin by reflecting on the disastrous mistake it was to regard Anglo Irish Bank as a systemic bank last September and the price the taxpayers will pay for this.