Dáil debates

Wednesday, 4 November 2009

National Management Agency Bill 2009: Report Stage (Resumed)

 

Debate resumed on amendment No. 3:

In page 16, between lines 35 and 36, to insert the following:

"2.--Where NAMA proposes to establish a Special Purpose Vehicle to purchase, manage or dispose of assets, it shall do so only in accord with regulations published by the Minister and approved by the Oireachtas which shall include, but are not limited to:

(a) the suitability of investors,

(b) the suitability and behaviours of members of the Board,

(c) the finance, planning accountability and reporting,

(d) the manner in which the Special Purpose Vehicle shall discharge its functions under this Act,

(e) the method of determining the appropriateness of paying a dividend or bonus to investors, and

(f) its consistency with the statutory objectives of NAMA under this Act.".

- (Deputy Richard Bruton)

5:00 am

Photo of George LeeGeorge Lee (Dublin South, Fine Gael)
Link to this: Individually | In context

The way the Minister has described the use of the special purpose vehicles, SPVs, which came like a rabbit out of a hat in terms of the legislation, has taken many people aback. It is clear from his description that they were not mentioned in the legislation because a view from EUROSTAT was required to indicate whether that option would be accepted as an off-balance sheet vehicle. I can understand why the Minister did not include that reference in the legislation until he got the approval, as he would have had to amend the Bill if EUROSTAT did not give the measure the go-ahead.

That highlights one of the significant issues about the Bill, namely, the murky nature of special purpose vehicles in terms of clarity. I know it is not intended to be a murky thing but in terms of trying to understand its impact on the legislation it becomes a little confusing. That highlights the extent to which people will perceive an element of trickery in what we are doing, namely, trying to bury a large amount of borrowing on the back of a State guarantee in a manner which for accountancy reasons will be treated in a different way. We all know that it is State borrowing one way or the other but for accountancy reasons some excuse has been made.

The working of the special purpose vehicle is the most remarkable aspect of it because it will be a majority privately owned legal entity with €51 million invested by private entities. The most peculiar aspect of it is that those private entities, in investing their money, will accept to remain silent or to do what the Government would wish in terms of their involvement with the special purpose vehicle so that NAMA would have a veto. That makes one wonder about the kinds of people who would invest money in the special purpose vehicle. The Minister said in the course of the debate that he might expect pension funds to invest money in the special purpose vehicle. One can understand that he would probably like pension funds to invest their money in this special purpose vehicle, because to date pension funds have not done much in terms of asking any difficult questions, especially when they were looking after people's investments, investing much of our savings in banks and never asking questions about how those banks were run. I have no doubt they would be nice and silent in terms of their involvement in this special purpose vehicle, if required, but it poses a difficulty in that pension fund managers can change.

The ownership of a pension fund management company can change over a period of time. The extent to which many big financial companies are sold, merged or get taken over by an international body is significant. We are living in a time when there is an enormous amount of upheaval in financial circles. We do not know what the future will entail in terms of ownership of any particular financial entity or any fund management organisation. If it transpires that fund management organisations are ideally suited to be the private sector investor in the special purpose vehicle, as the Minister indicated he would welcome, they have an obligation in terms of the management of their funds to the people who have invested those funds. It is not beyond the bounds of possibility that one day someone will make those pension fund managers sit up and take notice, ask questions and do more in terms of living up to their responsibilities about where those funds are invested. 9 o'clock

It is conceivable that we might start off this process with the likes of Irish Life, which might be a welcome investor for the special purpose vehicle. Over a period of time, however, it might be taken over by somebody we do not know, and a person who is an investor or who has his or her funds invested through Irish Life might be very uncertain and unhappy about the performance of those funds, begin to ask questions, put the company under pressure and in doing so change the policy whereby it remains a dummy or quiet regarding its involvement in any investment decision relating to shareholdings for which it is responsible. It is possible that over a period of time the investors whom the Minister thinks will be well behaved in the beginning will, by 2010, have changed significantly in terms of their ethics, culture or rates of return.

As a result, one does not know about conflicts of interest. There will be an enormous amount of information involved in the special purpose vehicle and in any involvement with it. NAMA will be the biggest property management company on earth. To the extent that it is in possession of assets of such potential value, there will be many people who would like to have an insight into the information there. Over a period of time it is conceivable that the people involved in the silent part of the investment element of this special purpose vehicle might change the nature of what they do and why they are there. For that reason, it is important to provide in the legislation for regulations and rules relating to membership and operation for the people who would be on the board of the special purpose vehicle.

This special purpose vehicle is being given an enormous gift. It will be, as legally described and as accepted by EUROSTAT, an entity that is majority privately owned. It will issue bonds which will have a Government-backed guarantee. The entity is not paying a penny for that guarantee. It is a special purpose vehicle which will, the legislation states, aim to make a profit. It will do so on the back of a Government guarantee which, under any other circumstances, a government would sell or cause the users of that guarantee to pay a fee. I can understand why the Minister has the structure in such a way that it will operate as he has described, but the public will see it as the use of a huge public good, that is, the enormously valuable public's guarantee, for absolutely no charge. It will be used to build profits for a special purpose vehicle, a legal entity which is designed to maximise those profits and get a return. The public will become very unsure with regard to how that works, and who is making the profits and why, on the basis of an enormous gift. The public will feel it is unfair to be taken for granted like that.

To allay the public's fears it is important to make provision in the legislation for some form of protection. This would say, in effect, that we understand there could be concerns about the operation of an entity such as this and, to allay those concerns, we have provided in the legislation for rules, regulations and determinations about who, how and when an individual might qualify as a suitable person to be on the board of the special purpose vehicle. The public deserves that reassurance. It has been let down enormously by the Government and regulation in terms of the losses it has suffered in its investments, the collapse in the banking system and the consequences of that collapse. It deserves reassurance in the current uncertainty.

Nobody has a definite template for how to get out of our current situation; there is no guarantee that the NAMA rescue plan will work. The Minister knows that as well as Members on this side of the House. There are huge risks, huge uncertainties and huge concerns. In that environment, the public deserves some form of reassurance that, to the extent possible, rules and regulations will be provided for the operation of this vehicle, given that it is perceived to be such a small part of the NAMA operation. However, it is the little things that can trip one up, as has been said so often in politics and elsewhere. It is reasonable, therefore, to make the case for this amendment.

The other striking issue about this proposal so far, and it again drives home the need to give the public as much reassurance as possible, is the fact that I know, as the Minister and anybody who knows anything about banking knows, that when banks collapse or there is a collapse in the banking system there is an enormous cost and, in most cases, a degree of that cost falls on taxpayers. However, nowhere in what has happened so far has there been an open acceptance that this is what the Government is doing. It produced a blueprint in the form of a draft business plan for NAMA and how it will operate. The figures that are produced suggest it will make a profit. It is possible that the Government feels it must present it as such because it is so difficult to tell people the truth, that NAMA will make a very significant loss. It is not because the Government wants it to make a loss but because it appears to be the law of the economic jungle that when banking systems collapse, there are big losses and when it falls on the taxpayer to bail them out, it is the taxpayer who suffers many of those losses. I do not believe there is any economic literature anywhere in the world which will tell one anything different.

Given that truth, it is extraordinarily odd that the Government would produce a blueprint which suggests that a profit could be made. Nobody who has looked at those numbers and who has any insight into accountancy, banking or economics thinks that the figures in the draft business plan will add up. The plan is presented as if it will not be a loss to the taxpayer but the reality is that the assumptions, particularly the one about recovering 80% of the bad loans over a period of time, are fanciful.

Photo of Frank FaheyFrank Fahey (Galway West, Fianna Fail)
Link to this: Individually | In context

Time will prove the Deputy wrong.

Photo of George LeeGeorge Lee (Dublin South, Fine Gael)
Link to this: Individually | In context

Perhaps if the Minister waits until Godot comes, it might happen. If all of the fanciful assumptions in the plan worked out, it is conceivable that NAMA would one day, when we are all most likely in the grave, make a profit or clear itself. Essentially, however, throughout the world collapsing banking systems cause taxpayers to foot a significant bill. It strikes me, therefore, that there is a huge element of cover-up with regard to the NAMA process, the blueprint, the way it is operating and how it has been presented, because it is very difficult to tell people that, particularly in the current environment.

The public deserves better. The Minister must come clean and explain to the public that it is fanciful to suggest we will get a profit out of this, that we would love to get a profit but there are huge risks and that very brave assumptions have been made but they might not work out. The Green Party was quite reasonable in its comments on this. Senator Dan Boyle said he considered it unrealistically optimistic, and he is absolutely right. The public needs to be treated better; it needs the Minister to be more up-front. In that spirit, it is important that the Minister do what he can in the legislation to give people reassurance. NAMA will most likely make a loss or at least there will be significant fears that it will make a loss, and people will feel they have been mugged. They already quite rightly feel they have been mugged. We have all been mugged. However, in terms of the legislation and what the Minister is putting together in the plan, the public deserves protection.

Many elements of this special purpose vehicle are disturbing. One wonders if the 51% shareholder will be an individual or a pension fund. It could easily be an individual. Who are those individuals, what are their qualifications and what is their bona fides in terms of what they are trying to do? Are they getting a big maximum return for them? Undoubtedly, the Minister does not expect it to be an individual. It would make more sense for it to be a fund. It could be an individual and I know the Minister would not rule out that, but he did refer to pension funds in the debate. It is conceivable that over a period a time the 51% could be held by somebody else. Consequently, it is essential that we provide for as much protection as possible.

This amendment seeks rules about the suitability of those investors and the suitability and behaviour of the members of the board. The public deserves to have that in the legislation. The amendment refers to finance planning, accountability and reporting for the SPV. That is absolutely essential. If, as the Minister has argued, this is a small part of the overall NAMA process, it should not be a big deal to give such reassurances in the legislation. It is beyond question that we have an obligation to the public, given that there is so much secrecy about the operation of this NAMA legislation. There are so many things that will not be discoverable and so many elements where there is potential for conflict of interest in terms of who knows what and how they might operate, it is indefensible not to be support this amendment.

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
Link to this: Individually | In context

There are major flaws in the Bill which those of us on this side of the House are attempting to correct. One such flaw relates to the lack of transparency and accountability required to provide reassurance to taxpayers. What is happening is shocking and completely disrespectful, particularly when one considers that €54 billion of taxpayers' money is at stake and needs to be protected. The Minister has refused to legislate in respect of a Dáil committee to oversee NAMA. He has also failed to make provision in the Bill with regard to the freedom of information legislation. Furthermore, he has not included a separate section to deal specifically with how the master SPV and the baby SPVs will function and what will be their function.

There is a lack of information at present. It is critical that we should be informed as to who will be the investors and how the master SPV will operate. We have been told that the master SPV, not NAMA, will purchase, manage and dispose of the assets. As Deputy Lee stated, this information came as a bolt from the blue. The Minister has really pulled a rabbit from the hat. It is regrettable that we were not provided with this information at an earlier date.

Amendment No. 3 seeks to control and regulate the master SPV and the baby SPVs and to ensure that the taxpayer is protected. In that context, I hope the Minister will accept the amendment.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Deputy Lee, in a very interesting contribution, referred to the business plan. The latter is a draft interim plan and it was not concocted for a political purpose. On Second Stage, Deputy Burton inquired as to the whereabouts of the business plan and other Opposition Deputies were complaining that enough information was not being provided. In such circumstances, I asked the interim chief executive of NAMA and his staff to prepare an interim plan. They did so but I gave them no riding instructions in respect of it. When I introduced the legislation I made it clear that I would be quite satisfied if NAMA broke even. My instructions to my officials and to those working at the NTMA was that regardless of the way matters are designed, they must ensure that we break even in respect of NAMA.

I accept the plan is subject to the assumptions made in it. We can argue about those assumptions but the interim plan was prepared in good faith. There will be an onus on the board of NAMA, when appointed, to draw up a formal business plan. That is the key point. The relevant Dáil committee will be able to examine that plan and continue this debate. It would be more constructive if the debate were to continue in that context because the board, which will be charged with fiduciary obligations on the part of its directors, will be obliged to stand over the plan.

I wish to deal with a number of extraneous matters before commenting on the amendment. Deputy O'Donnell referred to the Fitch credit rating agency. He is correct in stating that this agency assessed our position on an Exchequer and on a Stability and Growth Pact basis. The latter is the basis upon which assessments will be made. It is better for the country that there is a Stability and Growth Pact basis which is separate from the Exchequer basis. The statement relating to the downgrading by Fitch makes for interesting reading. Although it is a downgrading of two notches to AA-, Fitch notes that the long-term outlook is stable and states:

Fitch has downgraded Ireland's sovereign ratings to reflect the severity of the decline in nominal GDP and the exceptional rise in government liabilities... However, the agency notes the vigour of the government's fiscal consolidation response to date, the expectation of further aggressive budget tightening and the likely success of the National Asset Management Agency (NAMA) in rehabilitating the banking sector. All these factors have helped stabilise the outlook for Ireland's creditworthiness.

Fitch also makes the point that NAMA is "likely to be successful in stabilising and rehabilitating the banking sector, providing both solvency and liquidity support and mitigating pressures on the supply of new credit to industry and households".

It was important to read that part of the Fitch statement into the record because the Deputy referred to the assessment in a particular context. However, the general context of the assessment is extremely positive with regard to this proposal. The contributions on this subject and in respect of this part of the Bill have been very positive as well. It is only natural that we all become lost in our rhetorical flights. However, the core of what was suggested and advocated was sensible. However, I regret to advise Members that this does not mean I am going to accept the amendment.

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

Deputy Gogarty will be disappointed.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

To turn to the merits of amendment No. 3-----

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Deputy Gogarty is leaving.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Some of Deputy Gogarty's suggestions will be accepted.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

That is what the Minister has been telling him since the special convention.

(Interruptions).

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

The EUROSTAT position on the balance sheet treatment of NAMA and the SPV took account of the balance between State and private engagement in the proposed organisational structure. I have a great deal of sympathy with the points put forward by Deputy Burton. In general, when there is an asset purchase arrangement in place when one is engaging in a commercial operation through borrowing - for example, when one capitalises a semi-State body - in Stability and Growth Pact terms, the transaction occurs off balance sheet. Even the capitalisation of Anglo Irish Bank is an off-balance sheet transaction in Stability and Growth Pact terms because that institution is a commercial entity.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

It is off the wall.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

I will not be drawn on this subject. Apart from maintaining a particular commercial entity, it is essential for the stability of our financial system.

The position in respect of bank rescue operations is that there is a specific prohibition, under EUROSTAT, on treating such a vehicle as other than borrowing for Stability and Growth Pact purposes. Rather than repeal this provision in light of the current banking crisis - I understand some member states made demands in this regard - it has been decided to devise methods to ensure that avoidance can be achieved in a different way. Essentially, that is what has happened in Europe in respect of this matter. I understand the frustration of some Deputies with regard to the apparently peculiar character of the transactions which that generates. However, that is where Ireland, as a country, stands.

The implications of being in the Stability and Growth Pact for the purposes of this investment are quite serious. They do not just relate to the actual picture as regards the national debt, they also relate to the fact that as payments are made in a different direction, they count as being in and out of the national balance sheet. That would make the computation of the national accounts exceptionally complex.

In any event, I cannot accept the amendment because it could result in EUROSTAT changing its preliminary decision on the treatment of NAMA's operations and the national accounts. I have repeatedly explained that we should welcome EUROSTAT's preliminary decision - which most Deputies have done - because, as a result of it, the acquisition of assets from the financial institutions will have no effect on either the general Government debt ratio or the general Government balance. That places the asset protection scheme on an equivalent footing with bank support schemes in other member states, which are also being recorded off balance sheet. The main advantage of this is that it minimises the danger of the markets or international investors misinterpreting our headline debt or budget balance ratios when comparing Ireland against other EU states.

I accept that this statistical treatment does not change the basic fact, which Opposition Deputies naturally highlighted, that the operations of NAMA will lead to an increase in the amount of the State's potential liabilities. However, it should not be overlooked that these liabilities will be matched by countervailing asset holdings.

It is intended that the master special purpose vehicle will be established by the board of NAMA to conduct the purchase, management and disposal of loan assets which have been identified and valued by NAMA. The legislation provides a robust process for the appointment of members of the board of NAMA, requiring that they should possess senior level experience and expertise in relevant areas. These are complex commercial tasks and there is a danger in imposing statutory regulations and restrictive rules in respect of them.

A detailed legal shareholder agreement is being drawn up and will be put in place to ensure that, at all times, the NAMA board will have a veto over all the master SPV's actions and decisions. This will protect the NAMA board, which will have significant responsibilities, and it is also in the interests of all citizens and taxpayers. I intend to issue a direction to the board of NAMA to the effect that not a single decision that would not be in the best interests or in line with achieving the objectives and purposes of the NAMA legislation should be made or should be allowed to be pursued by the master SPV. I undertook on Committee Stage to have the NAMA SPV and group entities issues addressed in more detail in the legislation and to refer the matter to the Attorney General. The issues have been examined. I propose to introduce a number of amendments explicitly applying provisions of the Bill to the NAMA group entities. While these amendments can be dealt with later in the debate, I will outline them now.

First, the Prevention of Corruption Act 2001 provisions that apply to the NAMA board and staff will be extended to all directors on the boards of NAMA group entities. Second, the duties relating to NAMA board members will also extend to the boards of the NAMA group entities. In addition, I am bringing forward an amendment to require NAMA and all NAMA group entities to have a register of interests for board members and senior staff. I acknowledge it was Deputy Mulcahy who suggested this and Deputy Burton who suggested the earlier ones. Third, the detailed reporting requirements in Part 3 of the Bill will also apply to the activities of NAMA group entities and the powers and rights that NAMA has in its dealings with participating institutions will attach to NAMA group entities.

There has been an amount of revision of the Bill in respect of this subject. The Attorney General is satisfied that the core power exists. There has been a detailed section by section analysis of this matter which I believe addresses many of the concerns raised by the Opposition. I cannot go the final distance that Deputies Bruton, Burton and Rabbitte want me to go because I must keep within the boundaries of the EUROSTAT advice. Clearly, that is an important issue. Again, the Dáil committee can evaluate and scrutinise what is put in place, including the shareholder agreement.

The heads of the shareholder agreement can be submitted to the committee. However, I cannot give an undertaking on every provision of the shareholder agreement for obvious reasons.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

While NAMA can veto something, can it cause something to happen? Can it create something as distinct from vetoing private sector involvement?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

One has to view the vehicle in the context in which it is established, namely, it creates an investment opportunity for a person who believes that NAMA will make a profit and to make a return on their investment. It must be remembered it is a risk investment in that the capital applied, leaving aside any question of dividend, is at hazard by virtue of the investment.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Can the SPV create a subsidiary or associates which they could use as derivatives to off-load the risk?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

No. As I understand it, the subsidiaries referred to can deal only with management functions. Financial functions can only take place within the SPV, the master vehicle. The subordinates, if established, are purely for management and not financial purposes. The quantum of the investment is so low it would become pointless at that level to delegate the investment into parcels or particular vehicles.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

We have not had sight of the shareholders agreement which the Minister has seen. The House might, perhaps, be a little more assured if we had sight of that agreement.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

We do not have it yet.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Will the shareholder agreement prevent the banks from being shareholders in the master SPV? Will it prevent unsuitable people becoming members of this board? I am speaking in this regard about people who are unsuitable in the broadest sense, unsuitable for this job, not necessarily unsuitable in terms of conflicts of interest or corruption, but because they are not appropriate people to be investors in an asset recovery system which is dealing with property developers and financial institutions with many cross obligations. Where in the shareholder agreement is the reassurance that these people will be suitable?

The Minister has stated that it is absolutely crucial that the SPVs are autonomous in their decision-making but he has not explained how he squares their autonomy with the power of veto in the hands of NAMA and his powers of direction. If they are autonomous, from whom are they autonomous if not from NAMA, Ministers and others? How does the Minister square this with his claims that they are autonomous?

The Minister did not respond to the point made earlier by Deputy Barrett that not only will SPVs make decisions, but they will be directly responsible and accountable at law. If that is the case and they are, as a company of €51 million private and €100 million in all, managing a €54 billion portfolio, what does the Minister mean when he says they are accountable at law? Can they be sued in respect of decisions that having a bearing on a portfolio that is entirely different from the one they have put in? Can the Minister explain the purpose of the €100 million put into this vehicle? From where did that come? Why not have a special purpose vehicle with €1 in it? This would ensure there is no issue in terms of potential returns.

In short, the Minister has not adequately explained why we cannot go some of the way towards these amendments to at least control the suitability of investors, have published returns that can be audited by the Comptroller and Auditor General and have a methodology for determining the dividend that we in this House can see. Surely, some of these matters can be presented to us rather than leaving them to an act of faith in NAMA and the Minister with the directives he issues.

Photo of Seán ArdaghSeán Ardagh (Dublin South Central, Fianna Fail)
Link to this: Individually | In context

I have a couple of questions for the Minister arising out of his contribution. I agree that accepting the amendment in toto could result in the EUROSTAT changing its mind in regard to particular items. I recall reading that the reason EUROSTAT accepted the argument put forward by the Central Statistics Office in relation to this matter was that under the methodology it uses, there would be private investors who believe that there is a potential for substantial profit in being part of an SPV.

The reason for using the SPV is to get, as the Minister said, the loan book off the Exchequer balance sheet. We are speaking about a significant amount of money. It is approximately 30% of GDP. If an international investor is monitoring the situation, it looks better on paper if the national debt is at 70% of GDP rather than 100% of GDP. Obviously, serious investors know the difference. This has happened in France and Germany and it provides a better perception of the national balance sheet.

I agree with much of the content of the amendment, including the provisions relating to the suitability of investors. I am delighted to hear the Minister say that this issue comes under the prevention of corruption provisions and that the declaration of interests will be put in place for each of the directors. I am interested to know what issues within paragraphs (a) to (f) the Minister believes would affect EUROSTAT's decision on the matter. It would be interesting for us all to hear the Minister's response in this regard.

At the end of the day, it is important that the principles behind the SPV are set out. I accept what the Minister said, namely, that it will probably be some form of insurance company or people in the market for bonds and pension purposes in the future and who have a stake in the Irish economy who will invest in this vehicle. Is the 10% bonus at the end of the ten years written in stone or can it be adjusted in order to attract investors into special purpose vehicles, SPVs? Has a deal already been done with investors in principle and is there an agreement that they will be prepared to go into this particular type of vehicle based on the current situation and that it is likely to continue into the immediate future? What is the up-to-date position with regard to the coming to fruition of the particular type of vehicle or way of doing things in place currently?

The people involved in this must be above reproach and what the Minister has stated to date suggests this will be the case. He has also said the committee will also be able to examine the code that will be adopted. This must not only be above reproach in form, but also in fact. It is vital that there is no fall-out from the SPV or from the principles or people behind it that could in any way embarrass not only us, but the economy of the country in such a way that our financial credibility could be endangered.

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
Link to this: Individually | In context

Deputy Joan Burton, on her second contribution.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

I welcome the concessions made by the Minister on the advice of the Attorney General to give legal recognition to the SPV in the Bill. That is a positive step.

In section 4, the definition of a NAMA group entity on page 20 is "a subsidiary of NAMA" and so on, and reference is made to "any other body corporate and any trust, partnership," etc. The Labour Party has put forward an amendment in section 17 to extend that definition to include the SPV, in the context of it having a minority or majority share in a vehicle. In addition to the concessions the Minister has made, it is necessary to recognise the kind of vehicle this is because it is not majority owned. The Minister may be clear in his mind that this vehicle cannot have further subsidiaries or associates - I do not want to go into the tax issue but if people were clever enough they could put these offshore - but we need a lot more specific, technical prevention measures introduced. Will the Minister check this out with the Attorney General? Will he agree to do that?

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Before the break, the Government seemed to wobble. We are all greatly relieved the crisis seems to have passed. There is such merit in this amendment that even Deputy Gogarty took it to heart before the break.

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
Link to this: Individually | In context

The Minister was eating his garlic tonight and his response was quite adequate for the Green Party.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Garlic and greens. In any event, it appears the crisis has passed and Deputy Gogarty's pledge to support the amendment was short lived. It was unusual that he said he would support it unless the Minister could persuade him otherwise. The Minister did not even try, but Deputy Gogarty will still not support it.

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
Link to this: Individually | In context

He did persuade us. He gave a comprehensive response.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

It is like the little boy who cried wolf - we can expect it one of these days. I ask the Minister to return to the issue of the shareholders' agreement. He said the board is not up and running so we cannot talk about what is in the shareholders' agreement. What kind of things has the Minister in mind that will mean the minority shareholder will dictate the play? I have some difficulty with that. I can understand how NAMA will be able to veto certain things it thinks are not consistent with the purpose of this legislation or certain actions the banks want to take. However, how does it deal with issues in terms of things NAMA might want to do? NAMA can stop things from happening, but can it cause things to happen? I am not sure I understand how this is permissible under the construct the Minister is going for.

Like Deputy Ardagh, I wonder about the Minister's response to the Fine Gael amendment. If the Minister were to take on board this amendment, what elements of it would put it at risk from a EUROSTAT review? I cannot see how to prescribe that the investors ought to be suitable or that the people directing the operation ought to be appropriate or the requirement to deal with how the special purpose vehicle will discharge its functions could put the amendment outside the line. Part of the problem here is that the Minister has very congenially -----

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
Link to this: Individually | In context

I am reluctant to cut across the Deputy, but we are on the second round contributions.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

One last comment. The Minister has left us hanging in that he has assured us that he has just had a message from the Attorney General, who has advised him he may indeed accede to those difficult questions being posed from the Opposite side of the House. However, we do not know when and how he will accede. The Bill will be gone from this House again before the Minister addresses the issue. He has some amendments here, but he has also promised us amendments that will materialise later. That will not arise until the Bill goes before the other House. I would like to see them before we finish with the Bill in this House.

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

The handout the Minister issued on NAMA mentioned that on winding up there would be a 10% bonus, but also mentioned a cap of €5 million. Does that 10% bonus refer purely to private equity?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

To the private equity.

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

Would NAMA be entitled to 10% also?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Yes, the same dividend rule would apply.

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

I just wanted to clarify that. Special purpose vehicles are quite commonplace in the private sector. The Minister is setting up this SPV in order, technically, to remove the €54 billion from the balance sheet. However, credit rating agency, Fitch Ratings, factored in the €54 billion that NAMA is taking on board.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

It is being set up in order to differentiate the two liabilities.

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

The Minister stated the debt ratio would be 110%

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

That would be Exchequer debt as distinct from -----

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

Going back to the point on the private sector, the Minister is setting up the SPV to get it off the balance sheet. For it to be off the balance sheet, it must satisfy a number of requirements, namely that it is a separate legal entity with autonomy of decision in day to day operations, be able to incur its liabilities on its behalf and have complete accounting information. In a normal case in the private sector, anyone investing in an SPV will sit down, and even if they hold only 49% of the shares, with someone else holding 51%, he or she will still look at the suitability of investors. I expect anyone who would invest 49% would question who sits on the board. For finance, planning, accounting and reporting, there is no way someone would invest €49 million without questioning how the investment will perform, will be reported or the manner in which the SPV should discharge its functions under the Act.

Effectively any SPV is set up for a particular purpose: it must carry out its functions. The method and determination of the appropriateness of paying a dividend or bonus to investors are standard in terms of the way the dividend will be paid and the measures that will be used in terms of profit. Has the Minister or the Attorney General, while looking at the review, asked EUROSTAT its view of the amendment? We are looking at a structure to protect the 49% interest. I see nothing inconsistent in the amendment. If it operates in the private sector, it should be done in the same way in the public sector.

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

Could the Minister clarify if there will be a separate SPV for each of the banks? Is the €100 million a figure per bank per SPV?

Photo of Terence FlanaganTerence Flanagan (Dublin North East, Fine Gael)
Link to this: Individually | In context

Like previous speakers, I would like the Minister to circulate a more complete note because many questions remain unanswered. We must know how many SPVs are envisaged and their roles.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Deputy Kennedy asked if there would be a separate SPV for each financial institution. There will not be. Also, the €100 million is the total consideration of the entire special purpose vehicle.

Deputy Bruton asked why have €100 million, why not establish a €1 company. In Deputy Rabbitte's constituency many years ago there were developers and builders who incorporated companies for £1 and then liquidated them when foundations of houses were unsound. A sovereign state cannot behave in that way. The subscribed capital is likely to be €100 million, a sum accepted by EUROSTAT as appropriate. I could not assure the House that EUROSTAT would find a €1 company to be appropriate. Deputy Rabbitte's then Labour Party colleague made his political reputation on dealing with these people who built houses with £1 companies covering them.

Of course the crucial point about subscribers is that the NAMA board will be able to decide who the subscribers should be. It will have complete control over that area. Fantastical pictures have been painted of hedge-fund owners and disguised banking interests moving in but the reality is that NAMA itself will have to make a commercial decision about an appropriate set of subscribers. I doubt it would be a natural person because a company would give the clarity a private individual would not have for a subscription.

Deputy Bruton also asked about the position of the Comptroller and Auditor General. The Comptroller and Auditor General will audit the special purpose vehicle. That is clear from the definitions in the legislation that have been strengthened by the amendments. It is under full control of the Comptroller and Auditor General.

Deputy Ardagh asked if the deal had been done on NAMA yet for the special purpose vehicle. That cannot be done until the board is established so there is no question of negotiations having been embarked upon or concluded because that is a matter for the board of the agency. This all illustrates the urgency of the appointment of the board of the agency. I want to proceed with this forthwith on the enactment of the legislation because it must attend to important responsibilities immediately.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

How can the Comptroller and Auditor General audit a private company?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

We provided for it in the legislation through the creation of the group entity.

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

Would a private company not need to have a separate private auditor as well? Will the Comptroller and Auditor General be the group auditor?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

That is a matter for the company but it will be a parallel audit if it opts for that.

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

It is a legal requirement.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Someone must make that decision within the company.

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

I accept the Comptroller and Auditor General will be the group auditor but is there not a requirement for a stand alone audit in respect of the SPV?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Yes, but there is nothing under the amendment to stop the Comptroller and Auditor General becoming that person for company law purposes, as well as the public audit he is required to do under the legislation. That is a very detailed matter that does not require to be specified in legislation at this stage.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

We put forward an amendment to allow for a private auditor together with the Comptroller and Auditor General.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

That was a different amendment.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

It was part of the complexity of the definition of the entity.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

That is a fair point but the Comptroller and Auditor General already has that power and it may well be that this is one of the appropriate contexts in which to exercise it.

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

Is EUROSTAT satisfied that the Comptroller and Auditor General will be auditing a private vehicle?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Yes. This is a matter that can be constructed but the preliminary advice is that it is satisfied with the general thrust of what we are doing. I cannot predict the outcome of discussions with EUROSTAT to finalise all of the details of this, as Deputy O'Donnell would appreciate.

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

So none of this has been finalised.

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

A great deal of it has been finalised but I would like to deal with the question of the shareholding agreement that both Deputy Rabbitte and Deputy O'Donnell raised. As Deputy O'Donnell rightly said, everything depends on the terms of the shareholders' agreement but shareholders' agreements are very common. He gave the private analogy but there are many shareholding agreements where the subscriber takes a 1% shareholding but determines the entire policy of the company. I have seen many shareholding agreements where that has been the case.

It seemed to me that much of Deputy Rabbitte's argument was based on the majority-minority zero sum game. To use a metaphor from our political experience, the shareholding agreement is not unlike the Good Friday Agreement. It can provide a consensual manner in which a company will be managed consistent with the legislation.

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

Can we see the shareholders' agreement?

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
Link to this: Individually | In context

Not all of the details of the agreement can be submitted on execution to the parliamentary committee but its principle terms can be.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Again I am disappointed in the response. We are being asked to accept the rejection of this amendment that would give the Oireachtas some control without any sight of the shareholders' agreement. The Minister is totally vague as to the criteria EUROSTAT applies that should inform the Oireachtas decision in the area. He offers platitudes about what EUROSTAT might accept.

Deputies Ardagh, Rabbitte and O'Donnell asked the straight question what element of amendment No. 3 in my name contravenes the EUROSTAT requirements but the Minister did not answer. He did not even advert to the question in his response. That suggests he is evading questions coming from all sides of the House. The suitability of investors could not interfere with them, the behaviour of members of the Board might but not their suitability. Similarly, the finance, planning accountability and reporting could not interfere with them. Perhaps the manner in which the Special Purpose Vehicle shall discharge its functions could interfere with the criterion of being autonomous. If, however, it does interfere how can the Minister say that a veto by NAMA does not interfere with their autonomy or that his ability to issue a direction that binds NAMA, and by extension the special purpose vehicle, does not interfere with it? We are being asked to accept the Minister's word even when some of his assurances sound as if they come from Alice in Wonderland.

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

Exactly. It means whatever the Minister says it means.

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

That is what I find it difficult to accept. We are being asked time and again to accept on faith in respect of this legislation that the Minister has many things that are too sophisticated for him to explain fully to us in the House but that if we trust him he will have everything sorted. We would not be in the hole we are in if Ministers and advisers in the financial and regulatory system had the answers sorted. The Minister ignores sharp questions from Deputies on both sides of the House when he sums up. We do not have that level of confidence.

Has the Comptroller and Auditor General or the Attorney General been consulted in respect of EUROSTAT and whether our amendment would interfere with its independence? Do we have a legal opinion of our own even if we do not have a EUROSTAT opinion? I am not convinced that we should time and again accept that on the day everything will be right, that the Minister will form an Oireachtas committee that answers all our needs, will come up with a shareholders' agreement that answers all our problems or that we can afford to suspend our disbelief and let the Minister and his officials away with it. Unfortunately we have suspended our disbelief too often in the past and appalling consequences have come of that.

I cannot accept the Minister's assurances that we do not need some level of control. Intuition suggests that the Minister's shareholders' agreement with his veto and directive are far more likely to infringe what we know of EUROSTAT than my humble amendment, which simply provides for information to be presented and that the people on this board are suitable persons, do not have conflicts of interest, report effectively, and do not interfere with the objectives of NAMA. This amendment is eminently acceptable. It may need a small bit of tweaking but I think Deputy Gogarty will finally accept that it should be accepted in principle, subject to some tweaking in the Seanad to suit the Minister's requirements.

Amendment put.

The Dail Divided:

For the motion: 65 (Bernard Allen, James Bannon, Seán Barrett, Pat Breen, Tommy Broughan, Richard Bruton, Ulick Burke, Joan Burton, Catherine Byrne, Joe Carey, Deirdre Clune, Paul Connaughton, Noel Coonan, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, John Deasy, Jimmy Deenihan, Andrew Doyle, Bernard Durkan, Damien English, Martin Ferris, Charles Flanagan, Terence Flanagan, Brian Hayes, Tom Hayes, Michael D Higgins, Phil Hogan, Brendan Howlin, Paul Kehoe, Enda Kenny, George Lee, Ciarán Lynch, Kathleen Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Michael Noonan, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, Jan O'Sullivan, Maureen O'Sullivan, Willie Penrose, John Perry, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Leo Varadkar, Jack Wall)

Against the motion: 81 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Niall Blaney, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, Brian Cowen, John Cregan, Ciarán Cuffe, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Frank Fahey, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Billy Kelleher, Peter Kelly, Brendan Kenneally, Michael Kennedy, Tony Killeen, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Tom McEllistrim, Mattie McGrath, Michael McGrath, John McGuinness, Martin Mansergh, Micheál Martin, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Rory O'Hanlon, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Peter Power, Seán Power, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary Wallace, Mary White, Michael Woods)

Tellers: Tá: Deputies Paul Kehoe and Emmet Stagg; Níl: Deputies Pat Carey and John Cregan.

Amendment declared lost.

10:00 am

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

I move amendment No. 4:

In page 16, between lines 35 and 36, to insert the following:

2.—(1) For the purposes of this Act, "the Oversight Committee" shall mean a committee of Dáil Éireann, or a sub-committee thereof so enjoined and appointed by a Resolution of that House, consisting of specified persons not being members of the Houses of the Oireachtas to report to Dáil Éireann every 30 days on the operation of this Act and the activities of NAMA.

(2) The Minister, NAMA, and any other body or person having functions under this Act shall be required to co-operate with the Oversight Committee in the performance of its functions.".

The Dail Divided:

For the motion: 66 (Bernard Allen, James Bannon, Seán Barrett, Pat Breen, Tommy Broughan, Richard Bruton, Ulick Burke, Joan Burton, Catherine Byrne, Joe Carey, Deirdre Clune, Paul Connaughton, Noel Coonan, Joe Costello, Simon Coveney, Seymour Crawford, Michael Creed, Lucinda Creighton, John Deasy, Jimmy Deenihan, Andrew Doyle, Bernard Durkan, Damien English, Martin Ferris, Charles Flanagan, Terence Flanagan, Brian Hayes, Tom Hayes, Michael D Higgins, Phil Hogan, Brendan Howlin, Paul Kehoe, Enda Kenny, George Lee, Ciarán Lynch, Kathleen Lynch, Pádraic McCormack, Shane McEntee, Dinny McGinley, Liz McManus, Olivia Mitchell, Arthur Morgan, Denis Naughten, Dan Neville, Michael Noonan, Kieran O'Donnell, Fergus O'Dowd, Jim O'Keeffe, Jan O'Sullivan, Maureen O'Sullivan, Willie Penrose, John Perry, Pat Rabbitte, James Reilly, Michael Ring, Alan Shatter, Tom Sheahan, Seán Sherlock, Róisín Shortall, Emmet Stagg, David Stanton, Billy Timmins, Joanna Tuffy, Mary Upton, Leo Varadkar, Jack Wall)

Against the motion: 81 (Dermot Ahern, Michael Ahern, Noel Ahern, Barry Andrews, Chris Andrews, Seán Ardagh, Bobby Aylward, Niall Blaney, Áine Brady, Cyprian Brady, Johnny Brady, John Browne, Thomas Byrne, Dara Calleary, Pat Carey, Niall Collins, Margaret Conlon, Seán Connick, Mary Coughlan, Brian Cowen, John Cregan, Ciarán Cuffe, John Curran, Noel Dempsey, Jimmy Devins, Timmy Dooley, Frank Fahey, Michael Finneran, Michael Fitzpatrick, Seán Fleming, Beverley Flynn, Paul Gogarty, John Gormley, Noel Grealish, Mary Hanafin, Mary Harney, Seán Haughey, Jackie Healy-Rae, Máire Hoctor, Billy Kelleher, Peter Kelly, Brendan Kenneally, Michael Kennedy, Tony Killeen, Michael Kitt, Tom Kitt, Brian Lenihan Jnr, Conor Lenihan, Michael Lowry, Tom McEllistrim, Mattie McGrath, Michael McGrath, John McGuinness, Martin Mansergh, Micheál Martin, John Moloney, Michael Moynihan, Michael Mulcahy, M J Nolan, Éamon Ó Cuív, Seán Ó Fearghaíl, Darragh O'Brien, Charlie O'Connor, Willie O'Dea, Noel O'Flynn, Rory O'Hanlon, Batt O'Keeffe, Ned O'Keeffe, Mary O'Rourke, Christy O'Sullivan, Peter Power, Seán Power, Dick Roche, Eamon Ryan, Trevor Sargent, Eamon Scanlon, Brendan Smith, Noel Treacy, Mary Wallace, Mary White, Michael Woods)

Tellers: Tá: Deputies Emmet Stagg and Paul Kehoe; Níl: Deputies Pat Carey and John Cregan.

Amendment declared lost.

Photo of Séamus KirkSéamus Kirk (Louth, Ceann Comhairle)
Link to this: Individually | In context

Amendment Nos. 6 and 7 are related to amendment No. 5 and amendment No. 8 is related and an alternative to amendment No. 7. Therefore, amendments Nos. 5 to 8, inclusive, may be discussed together.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

I move amendment No. 5:

In page 16, between lines 36 and 37, to insert the following:

"(a) to contribute to the sustainable social and economic development of the State,".

This Labour Party amendment proposes to insert the words "to contribute to the sustainable social and economic development of the State". Members who were here for the Committee Stage debate will recall that the Minister agreed to accept the spirit of a similar amendment we tabled. Our Committee Stage amendment No. 40 proposed that "NAMA shall undertake proper and sustainable planning for all properties under development" and so on. I am in a slight quandary because the Minister said he would accept the spirit of amendment No. 40 and suggested that a way of doing that was to change the wording of our amendment to "sustainable social and economic development". We have done that, as the Minister suggested. However, he forgot his own advice because I note that his amendment proposes to insert the words "to contribute to the social and economic development of the State", which is the original Labour Party wording proposed.

I do not want to delay the House, but all I need from the Minister is an indication that he accepts, as we discussed previously, that the wording to be inserted should be "sustainable social and economic development of the State" in terms of the purposes of the Bill. If the Minister agrees to that, we can all go home a little happier.

The purpose of our amendment No. 8, as we discussed on Committee Stage, is to advise that the Bill should make specific references to the laws of the European Union and the guidelines and so on in regard to state aid and any other relevant guidelines. Given all the commentary we have heard about EUROSTAT, state aid and so on, this is a sensible amendment. I have not heard any good argument as to why it is not appropriate. It would probably protect the Irish position to a greater extent in the context of the references made in the previous discussion on the Bill.

On amendment No. 5, it goes without saying that while the purpose of the Bill is obviously to rescue the banks, the bankers and the developers, the primary purpose of spending €53 billion should be the sustainable social and economic development of the State. This will play out over a very long period. It involves vast numbers of properties and land all around the country. It is important that those who are tasked with being on the board of directors of NAMA and looking after the affairs of the agency and the special purpose vehicle should have sustainable social and economic development as a clear mandate and instruction to them from the Oireachtas.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Cá bhfuil na glasraí?

Photo of Alan ShatterAlan Shatter (Dublin South, Fine Gael)
Link to this: Individually | In context

On this amendment and the Minister's dealing with the social aspects, there is an issue to which many Members of the House may have given some thought. It has been dealt with or referred to earlier in some of the debates on the legislation but it is important to raise it here and to get a steer on how NAMA intends to approach it.

What I have in mind is the vast number of unfinished housing estates some of which are partially occupied and the vast number of apartments occupied by approximately one quarter of the numbers of people who may ultimately be in a position to purchase them. There are unfinished apartments and housing estates where planning permissions have been granted, conditions have not been properly complied with, developers have run out of money and are not in a position to complete estates, and those who have purchased and moved in find themselves in difficult circumstances. What I want clarified is how NAMA will deal with this.

Initially, the debts of the developers will be transferred to NAMA and it will remain, under the planning conditions granted, the developers' responsibility to complete estates. Then there will be developers who lack the capacity to complete estates. The only way they will be able to complete them is if they get additional funding through NAMA. There will be an issue of whether they should get that additional funding or whether the properties should be subject to a vesting order which places them within NAMA. Within Dublin city and county and in other parts of the country there are people living in unfinished estates and apartments where some of the basic facilities surrounding them have not been provided who could find themselves for years in that position. I want the Minister to clarify briefly what NAMA's role will be in seeking to ensure estates are properly finished, planning conditions are complied with, and people are not left living in what could best be described as a wasteland in circumstances where they are trapped within properties they cannot sell with facilities that fall very short of what the planning authority originally envisaged.

What sort of timeframe will there be for this issue to be dealt with? How will NAMA deal with the matter at a time when the debts have been transferred to it and the still indebted developer is not meeting obligations prior to a vesting order being sought? How will NAMA deal with the matter subsequent to it successfully obtaining a vesting order? If NAMA does not deal with the original developer, what will its role be in recruiting an appropriate developer or construction company to complete unfinished estates? What will be the economics of this? I can well envisage circumstances where to complete estates could result in a vast amount of accommodation being completed for which there are no purchasers. This is another additional level of problem. To what extent has this problem been addressed?

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

I support amendment No. 5, in particular, although I note the Minister has tabled a similar one. There is NAMA for the bankers and for the speculators and I suppose what we have here is barely crumbs from the master's table for ordinary people. It is unfortunate that we cannot strengthen this Bill in some way to deal more forcefully with the issues affecting real people.

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

I support the inclusion of the word "sustainable". To contribute to the sustainable social and economic development is fine, but when the Bill goes to the Seanad it would be worthwhile to consider including, in whatever form it might be, the social, economic and cultural development of the State. I say that because I listened to reference to large tracts of land which will never be built on and which could be of significant public benefit if they were made available to make up the cultural infrastructure deficit that exists in many different places and spaces. It would have the advantage of providing for better development overall.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

I thank Deputy Burton for her amendment. This was an issue which arose on Committee Stage. The Minister indicated that he is agreeable to the broad thrust of including this aim and objective as part of the legislation. As the Deputy will be aware, he will introduce his own amendment to this section to deal with the issue and the proposal of Deputy Burton. The Minister's amendment inserts the words "to contribute to the social and economic development of the State", but this, in addition to the existing powers, aims and objectives of NAMA which were set out in the legislation, will make it explicit that one of the purposes of NAMA will be to contribute to the social and economic development of the State. Given the Minister's amendment, although slightly differently worded than Deputy Burton's amendment, he would suggest that this is the more appropriate way of dealing with it.

The Deputy would ask, correctly, why the word "sustainable" is omitted at this stage. That is not to say the Minister is not in broad agreement with what the Deputy is trying to say, but there are circumstances where it could be envisaged that developments would not be permanent in nature. Even though they might contribute to the economic and social development of the country, they need not necessarily-----

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

May I enlighten the Minister of State? The point is it was the Minister who-----

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

I understand that point. I am coming to that one.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

Amendment No. 8 is the Labour Party's amendment. The Minister suggested we amend it by including the word "sustainable"-----

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

He did.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

-----and he has agreed to that.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

And then the Department of Finance got at it.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

He did that in the context of section 40, but the point is that in the case of projects which might be undertaken or in the way in which the aims and objectives of NAMA play out ultimately, some of those may not necessarily be permanent and it would not be appropriate to proscribe in some way certain developments which might otherwise be social and economically advantageous to the State but not necessarily sustainable.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

I am trying to help Fianna Fáil with our absent friends.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

The Minister has indicated that the broad thrust and principle of what Deputy Burton is saying is taken on board and is under active consideration in terms of the word "sustainable". I think she will agree that at this stage-----

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

It is a fashionable and deeply held conviction of some parties in this House.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

It is.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

We are trying to keep the Government together.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

We accept that. The Minister is certainly taking that under consideration.

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

Sustainability was first used at the United Nations conference on economic development in Rio de Janeiro in Brazil. It is used in a way quite different from the way the Minister of State is presenting it, but I am not hung up on it.

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Does it mean permanent?

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

We all would accept that we would want economic and social development to be sustainable, but we do not want certain activities or developments outlawed by having simply the word "sustainable" included.

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

Nobody suggested that.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

I make the point that such is the advice of the Attorney General, but the addition of the word "sustainable" certainly is under active consideration arising out of Deputy Burton's amendment and the comments which she has made today.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
Link to this: Individually | In context

It is a pity Deputy Gogarty had to leave.

Photo of Peter PowerPeter Power (Limerick East, Fianna Fail)
Link to this: Individually | In context

I wish to address Deputy Shatter's point in the limited time available. It is an important point because all of us in our own constituencies face this problem of unfinished estates. Certainly, NAMA will have a potential role in that regard. Indeed, near where I live there is one of these unfinished estates. People have significant concerns in that regard. We can continue tomorrow.