Dáil debates

Wednesday, 20 February 2013

Mortgage Restructuring: Motion (Resumed) [Private Members]

 

The following motion was moved by Deputy Dessie Ellis on Tuesday, 19 February 2013:That Dáil Éireann:recognises that:— the two biggest issues in housing are mortgage distress and the lack of social housing; and — the current Government has pursued a policy to pass responsibility for providing social housing onto the private sector and has continued to deplete the public housing stock;notes that:— one in four mortgage holders in the State is in distress, while tens of thousands more are at risk of distress; — 115 mortgage holders are falling into distress every day; — Fine Gael and the Labour Party have failed to fully implement the recommendations of the report by the Inter-Departmental Mortgage Arrears Working Group (the Keane Report) into the mortgage crisis; — the Central Bank and the financial institutions are failing to be pro-active; — the Personal Insolvency Act 2012 will do little for the vast majority of mortgage holders currently in distress; — despite the fact that Sinn Féin and others have, since 2011, called for an independent statutory mortgage distress body to adjudicate and enforce agreements on mortgages between banks and mortgage holders, the Personal Insolvency Act 2012 establishes a Personal Insolvency Service but does not adequately deal specifically with the area of mortgage distress; — this Government, since 2011, has cut spending on housing by 19 per cent to €585 million, leaving local authority housing desperately under-funded, resulting in 98,318 households on waiting lists for local authority housing in this State; — there are 23,649 people housed as part of the rental accommodation scheme and 94,000 people in receipt of rent supplement, with recent cuts to rent supplement rates making securing affordable housing even more difficult and in some cases leading to families being made homeless; and — the National Asset Management Agency, NAMA is mandated to provide a social dividend, yet only 179 units have so far been provided for housing;calls on the Government to:— remove the veto given to lenders over proposed insolvency agreements in the Personal Insolvency Act 2012 and prioritise the maintenance of the family home in any agreements dealing with residential mortgages; — provide in the legislation for the independent adjudication and enforcement on mortgage distress cases, through a new category of agreement to be known as "independent agreement on mortgage distress" which will be adjudicated by a "mortgage restructuring panel" appointed by the Minister, who would have the statutory power to agree and impose agreements on lending institutions where the panel believes that such agreements would enable the mortgage holders to remain in the family home; — include the possibility of write-downs on portions of the mortgage debt as well as other options such as debt for equity swaps, mortgage-to-rent and short selling in the options available when reaching "mortgage restructuring agreements"; — take more direct action with the Central Bank to force lending institutions to adopt a more pro-active and lender-friendly approach to the mortgage crisis; — ensure that NAMA contributes to "the social and economic development of the State" in providing any housing units in its portfolio suitable for social housing; — develop a plan to commence the building of at least 5,000 housing units by the end of 2013, with a further 4,000 houses by the second half of 2014 for the public housing system, including the use of social housing bonds to fund these projects; and — restore funding for Traveller accommodation to its 2010 level.

Debate resumed on amendment No. 1:To delete all words after "Dáil Éireann" and substitute the following:"acknowledges that this Government inherited a severe mortgage arrears crisis; recognises that the Government has already taken a number of significant steps to address the mortgage arrears problem and also to stabilise the banking and wider economic situation; in particular, acknowledges that the present Government established the Inter-Departmental Mortgage Arrears Working Group and subsequently published the Group’s Report in October 2011; notes that the Report indicated that the mortgage arrears problem is complex and that a range of measures, such as personal insolvency reform, the development of mortgage to rent, the provision of mortgage advice, direct engagement by banks and the development of sustainable options by banks for their customers who are experiencing mortgage difficulties, will need to be advanced to address the problem; recognises that the Government has moved to implement the main recommendations of the Report and that a special Government committee, chaired by an Taoiseach, is overseeing the implementation of the measures across Government; acknowledges that significant progress has now been made on this implementation agenda, including the fact that:— the Personal Insolvency Bill 2012, which introduces new insolvency frameworks to allow for the resolution of unsustainable debt situations in a manner that is as fair as possible to debtors and creditors, has been enacted; — the Central Bank has obtained mortgage arrears resolution strategies and implementation plans from regulated mortgage lenders; — the Mortgage to Rent Scheme is now available across the country; and — a mortgage advisory function is now in place;encourages the Government and other authorities to continue this work; in particular to bring the new insolvency frameworks, as provided in the Personal Insolvency Act 2012, into operation as soon as possible and to enhance action by mortgage lenders to appropriately address unsustainable mortgage loans; notes the statement by the Governor of the Central Bank of Ireland at a recent conference on distressed property markets that, having ensured that the banks are much better staffed and organised for dealing with arrears, the Central Bank will be setting out its quantitative expectations for their effectiveness in achieving lasting solutions; notes the Government commitment to responding more quickly, and on a larger scale, to social housing support needs through a variety of mechanisms, including through increased provision of social housing and a restructuring of investment in social housing, to allow for the delivery of new social housing through more flexible funding models; supports the Government in developing new funding mechanisms that will increase the supply of permanent new social housing, including options to purchase on lease agreements, build-to-lease and the sourcing of loan finance by approved housing bodies for construction and acquisition; acknowledges that the National Asset Management Agency (NAMA) has identified in excess of 2,000 units that are suitable for social housing and are working with housing authorities to bring these into beneficial use for those in need; supports the Government’s overall housing policy statement; in particular, that a priority for Government action will be to meet the acute needs of households applying for social housing support, and in that context, notes and supports the Government’s continued commitment to meet the accommodation needs of Travellers; and notes that the Government’s overall social housing programme is framed in a manner which both optimises the delivery of social housing and maximises the return from the scarce resources available for that purpose." - (Minister of State at the Department of Foreign Affairs and Trade, Deputy Joe Costello)

6:25 pm

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I am sharing time with Deputies Catherine Murphy, Tom Fleming, Boyd Barrett and Finian McGrath.

Photo of Joanna TuffyJoanna Tuffy (Dublin Mid West, Labour)
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Is that agreed? Agreed.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I support this motion in general. I have a Bill in the lottery of Bills that would offer a real solution for ordinary home owners with distressed mortgages. I hope it will be before the House soon.

I wish to address an important related issue that has serious effects for many people but is receiving little or no attention or publicity, namely, the shared ownership scheme. It was introduced during the property boom to help people who could not get mortgages in the private market. It was operated by the local authorities. While it might have been useful in the period of significant property price inflation, it has turned into a negative equity nightmare. It is a noose around the necks of many young people and couples who cannot get out of that trap.

In 2011, a Dublin City Council discussion paper identified five major issues. The council has approximately 2,900 loans under the shared ownership scheme. One issue was negative equity, in which a loan's value was far in excess of market value and borrowers could not repay their mortgages. A second issue is that of people whose accommodation needs have changed, for example, after having one, two or three children. A third issue is that of purchasers approaching the end of their mortgages being unable to discharge negative equity, a fourth relates to people who want to surrender their homes because of anti-social behaviour and the fifth is that of purchasers who want to rent out their properties.

No legislative framework is in place to allow the council to deal with this problem. It cannot write down those mortgages. As legislation is necessary, the Government must act. In Dublin City Council, a high proportion of these loans are in arrears. I am working with a campaign grouped around these issues that is seeking to have the Government write these mortgages down.

I hope that the Minister of State is listening.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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I am.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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He is listening attentively.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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There is not a lot to listen to, but I am listening.

Photo of Catherine MurphyCatherine Murphy (Kildare North, Independent)
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I welcome this motion. I will focus on two aspects in the short time available to me. First, the so-called mortgage debt resolution. I will cite an example of a couple of people with whom I am dealing. They entered into the scheme with Ulster Bank in February 2012. They disclosed everything and were eventually offered an interest-only option for 12 months. Unfortunately, matters deteriorated from income and health points of view. Several months ago, they began trying to speak to the bank because the 12 months were just about finished. Despite their best efforts, however, they are being given the run around.

I made inquiries with the Central Bank, which advised that the people in question should make a formal complaint to Ulster Bank. The bank ignored them. I have advised them that they can now complain to the Ombudsman. They are stressed.

Some banks are not acting genuinely in the process. They need to be called out on it. The process is not working.

Second, the issue of those on the housing waiting list. In County Kildare, more than 7,000 people are on the list. The country's six worst councils account for 43% of the national waiting list - the four Dublin local authorities, Cork City Council and Kildare County Council. The bottom six counties account for less than 5% of the national waiting list. A targeted approach to the problem is urgently required. There is no overhang and NAMA does not have properties in most of the areas in question.

Some 4,338 families are in receipt of rent assistance in Kildare, the third highest figure nationally after Dublin and Cork. The levels of rent assistance are so far below the market rents in Kildare, particularly in the towns of north Kildare, which have a Dublin focus, that people are in difficulty. An exception was made for some Wicklow towns, for example, Bray and Greystones, but none has been made for Kildare. As a result, practically everyone is topping up rent from welfare payments. People are going without food and are not paying their utility bills. If they did otherwise, they would face the streets and many would need to take their children out of school.

The Government needs to start taking these issues seriously and producing practical solutions, not spin.

Photo of Tom FlemingTom Fleming (Kerry South, Independent)
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Ms Fiona Muldoon, head of the Central Bank's banking supervision section, addressed a bankers' conference on 16 October 2012. She put her finger on the pulse when she bluntly asked them to address the mortgage mess that they created. She warned of a lack of leadership in the sector and revealed that 167,000 residential and buy-to-let loans, amounting to €135 million, were in arrears at the time.


One of the immediate actions required to rectify the banking economy is a realistic approach to the chronic arrears issue, with some debt written off, long-term solutions for others and an acceptance of the reality of arrears. The problems of negative equity and personal insolvency are having a devastating effect on consumer confidence. Spending, job creation and tax returns are spiralling downwards. Today's news that AIB is planning a new increase in variable rates will undoubtedly be followed by all lenders in the market in a short time.


The property tax is being introduced at the worst possible time for householders. There is an immediate need to put it on hold at a minimum. Those who bought between 2001 and 2008 should receive stamp duty rebates until normal lending levels have been restored to the market. This would minimise negative equity, repair households' balance sheets, minimise the risk of personal insolvency and get a sizable number of people spending again.


I will quote Ms Muldoon, who was dealing with the real situation:

Meanwhile the misery of personal indebtedness, that is unsustainable for so many people, must be meaningfully dealt with. This is the size of the task and the enormous difficulty of it. This is the needle to thread over the coming years.


And if this is what we all face then I also want to tell you what I have found since I came to Irish banking: my experience is not necessarily of an industry 'humbled' ... Success is about finding solutions. Why the need to still talk of ‘being humbled’ four years on? Does it strike anyone else as a bit of ‘sack cloth and ashes’? A little penitential? Is it that we still require ... I am not sure. I am not sure. In any event, when I deal with the banks, I have not found humility. If the industry is grieving for the death of the economy, the mistakes of the past, I know which stage of grief it looks like to me!

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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I thank the Acting Chairman for the opportunity to contribute on this Private Members' motion on mortgages, the major distress for families, and the issue of housing. This time bomb is about to explode and we need to be ready for it. Following the promissory note deal, we also need to be on our guard concerning the issue of Article 123 of the Lisbon treaty and the concerns of the German central bank, the Bundesbank.

I hope that the Government is up early in the morning dealing with this significant potential crisis. If there is not real burden sharing and better debt resolution in the EU, the economy will be blown out of the water, with major consequences for our citizens, household arrears and debts. The Government can never claim that it was not warned. One in four mortgage holders is in distress while tens of thousands more are at risk of distress. Some 115 mortgage holders fall into distress everyday. The Government has failed to implement fully the recommendations of the report of the interdepartmental mortgage arrears working group, the Keane report, on the mortgage crisis. The Central Bank and the financial institutions are failing to be proactive. The personal insolvency legislation will do little for the majority of mortgage holders. We need to face up to these facts and support families in need, not destroy family life in Ireland.

I urge Deputies to support this motion, as it offers solutions. We need to remove lenders' veto over proposed insolvency agreements in the Personal Insolvency Act 2012 and prioritise the maintenance of the family home in any agreement on residential mortgages. However, we also need to provide legislation for independent adjudication and enforcement in mortgage distress cases, take more direct action with the Central Bank to force lending institutions and ensure that NAMA contributes to the social and economic development of the State by providing the housing units in its portfolio that are suitable for social housing.

6:35 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The crisis of mortgage distress is a disaster that will soon turn into a catastrophe. More than 160,000 families are suffocated with an unsustainable debt burden and the number is rising by approximately 800 every week. Nothing has been done. After two years in government there is no let up on the deepening of this crisis. The Government refuses - for reasons I cannot understand - to assert the control it has over the banks that we bailed out and where the Government is the major shareholder to simply tell them to sort this problem out by writing off unsustainable debt.

The economy is being utterly suffocated. It is not just the enormous distress and anxiety that the families directly affected are going through, but the entire economy is being suffocated because of the problem. If the Government is the major shareholder in the banks that we have bailed out why can it not simply tell them to write off the debt or restructure it in a sustainable way? It is inexplicable.

I accompanied a family with a distressed mortgage to AIB last week. The bank accepted that the mortgage was unsustainable and that something should be done but could not tell us what it would be. Someone muttered something about long-term forbearance. It was said, unbelievably, three times during the course of the meeting that the family might win the lotto in the next few years. Is our policy for dealing with mortgage distress or the effect it is having on the economy to hope that the country will win the lotto or that all of the people in mortgage distress will win the lotto? They are not going to win the lotto; the Government must make the banks do the right thing and sort out the problem.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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On a point of clarification, could the Minister of State clarify that when I asked him whether he was listening that he replied there was not much to listen to?

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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I was not in the Chair at that stage. I do not know what transpired.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I expect it will be on the record but I will pass it onto the shared ownership people who are in distress at the moment.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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Deputy Collins did enough talking herself when everyone else was speaking. She did not do much listening.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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I am sorry, Minister.

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I will pass it on.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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Deputy Collins did not do much listening-----

Photo of Joan CollinsJoan Collins (Dublin South Central, People Before Profit Alliance)
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I will pass it on.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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-----so she can pass on what she likes.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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I am sorry, Minister. We are moving on. I have just taken over the Chair.

Photo of Michael RingMichael Ring (Mayo, Fine Gael)
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Deputy Collins did not have the manners to listen to her colleagues. She has been talking all the way through the debate.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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Please, Minister. We are moving on.

Photo of Catherine ByrneCatherine Byrne (Dublin South Central, Fine Gael)
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I am grateful for the opportunity to speak in the debate. One of the legacies of the previous Government is the mortgage arrears crisis. It led the charge with its many developer friends and the bankers in its circle. The crisis is crippling many young couples. We are all aware of family and friends who are in mortgage distress. We know how stressful it is for them on a daily basis. I am concerned in particular about young people who bought into their dream home and have been left with the property tied around their neck.

Another situation relates to people who bought properties when they were single and since then they fell in love and are living together. It is very stressful for many of them to deal with two mortgages. The Government is making strides. The Personal Insolvency Act is one step in the right direction that will give an opportunity to some if not all to have some pressure taken off them. That is a welcome opportunity for everyone. Being in mortgage debt and not being able to pay one’s bills is stressful but it is a situation everyone in this country is dealing with at present. Times are hard for everyone. What we are trying to do is to make a better future for our children.

The impact on social housing is due to the many people who have had to give back their keys and put their names on a list in the city council offices. Driving through my constituency I fail to understand the number of vacant apartments. I welcome the initiative of the Minister of State, Deputy Jan O’Sullivan, who has identified 400 apartments and houses through NAMA that could be used for social housing. I have been a member of many regeneration board projects since 1999. Fatima Mansions, Bridge House and Bridgefoot Street are great projects that have added significantly to the inner city. Other developments lost out such as St. Michael’s Estate, Dolphin House and St. Teresa’s Gardens. We could blame public representatives for such projects not going ahead but communities must also take responsibility. I spent many years on such boards. Community organisations must take responsibility for PPPs not going ahead. In one case we were six weeks away from signing an agreement for a project to go ahead in the constituency but the plug was pulled by community organisations - not political parties or people living in the estates. They must bear some responsibility for some developments not proceeding. That is especially regrettable at a time when so many people need to go on the social housing list.

Photo of Michelle MulherinMichelle Mulherin (Mayo, Fine Gael)
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I am also pleased to speak in tonight’s debate. One truth that must be told about debt is that there is no easy way to deal with it. It will never be easy when one is up to one’s tonsils in debt or it is over one’s head. We are tasked with finding mechanisms to deal with debt, bearing in mind all the legalities and complications of the person who owes and the person to whom money is owed and what that means in reality. We must be compassionate. One of the main tenets of the personal insolvency legislation is to say to people that they are worth more than their debt and that there is a way to deal with debt. It does not mean there is a magic wand because that does not exist for the problems we have in this country with which we have been dealing bit by bit and making progress.

It must be acknowledged that progress has been made, including the stabilisation of the dreaded banks. We need banks. The Personal Insolvency Act is also a sign of progress, as is the work the Central Bank has carried out towards obtaining mortgage arrears resolution processes between the banks and lenders. The banks are required to take a long, hard look at a situation where people are being put out of their house and are handing over their keys. In some cases they paid €200,000 for a house that is worth €40,000 and they are still paying the remainder of the debt. That is totally unsustainable. People will be crushed under such pressure. That is a wake-up call for banks. With colleagues I recently met with the CEO of AIB. I am impressed with its plans this year to deal with each and every loan that is in difficulty from the point of view of restructuring it in a sustainable way, for example, by extending loans for 40 years. We must do whatever it takes because we are in desperate times. People want solutions and we must be imaginative and innovative about it.

I can only speak for where I am from and the general region, but the idea that we would build more social housing is absolutely crazy. It should be remembered that people who are on local authority housing lists are currently in accommodation. The accommodation in question is required to be up to a certain standard. In some cases the State is paying landlords most of the rent and in other cases people are paying the rent themselves. If we build more houses and put people into them we will leave empty properties and landlords who have mortgages will not be able to pay them. People were encouraged to build and buy houses and to let them out. Building more houses is definitely not a solution. It would be a ridiculous proposal for the area I come from.

Photo of Anthony LawlorAnthony Lawlor (Kildare North, Fine Gael)
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It is ironic that we are debating a motion from Sinn Féin which is seeking a truth and reconciliation board to be established in the North. I wish Sinn Féin Members would tell the truth when they come to the House. I speak in particular about Deputy Ferris who quoted a lot of figures yesterday. He said that when he added up all of the figures that more than 200,000 people were awaiting accommodation in the State. The reality however is that unfortunately, there are 98,000 people on housing lists in various local authorities around the country. The number has mushroomed in recent years. It is strange that Sinn Féin comes to the House and preaches to us about how we should look after people’s housing needs yet it is in power in the North and is on the housing authority there when in the Six Counties there are 36,000 people seeking houses.

Proportionately, that is the same as the number of people looking for housing here. Why should Sinn Féin Members come into this House and lecture us as to what we should do with regard to social housing when they are not looking after the people in the North of Ireland where their party is in power?

A Deputy spoke about NAMA during the debate on the Bill yesterday. NAMA has approximately 4,000 houses available for social housing throughout the country. We must get our local authorities to actively engage with NAMA. In my county of Kildare 227 properties were made available to the local authorities there but to date only four have been delivered. Forty three are contracted to be completed with the local authority, and a further 48 properties are actively under negotiation. It is vitally important that we, as public representatives, encourage our local authorities to actively engage with NAMA because it is willing to make those properties available for social housing to allow us remove the 98,000 people on the list. It is ironic that Sinn Féin Members should come in here and lecture us on the way we should look after our social housing needs when their party is in power in the North of Ireland and they do not care about the people there.

6:45 pm

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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I commend Sinn Féin on bringing forward this motion. It is an important issue. It is necessary that the House debates it and I acknowledge that Sinn Féin, in bringing this motion before the House, allows Members to address it.

However, three issues struck me regarding the Sinn Féin motion. The first is that there is no mention of homelessness, which is unfortunate considering the importance of the issue and that the Minister of State, Deputy O'Sullivan's Department has been robust in this area in protecting the homelessness budget to date. In my city sanction was given for the development of two new homeless units by the Simon Community and Fellowship House.

The two aspects in the Sinn Féin motion that I want to address is the bank veto and NAMA properties. If the banking veto did not exist in the insolvency legislation, would it be robust enough to stand up to a constitutional challenge because loans tied to secure debts have property rights attached, and if there was no veto would we be in a position where we would have been able to have passed that legislation? Another aspect of the veto that is not being acknowledged is that when the banks engage with a personal insolvency arrangement and do not use that veto it ties in all the unsecured lending of the borrower, namely, a credit card debt, a car debt, a credit union debt and other debts. What we are doing in the legislation is ensuring that when somebody gets a write-down on their mortgage, which may be done on a case by case basis, unsecured debt is also being reduced and regarded in the totality of the situation because it is ridiculous to deal with somebody's mortgage and not examine the other debt exposure they have.

The other aspect is the matter of NAMA on which the motion takes a simplistic approach. The difficulty with NAMA properties is that in many instances they are not located in areas where there is housing demand. What we need to see coming before the House, and which I have debated here with the Minister of State, Deputy O'Sullivan, is the proposal of NAMA looking at rent to buy programmes. If there are houses in estates throughout the country that are purchasable, we should be targeting those houses towards home ownership because despite the housing crisis, Ireland will continue to be a home purchasing nation into the future. In fact, half the residential properties in the country are mortgage free if one considers the broader context.

There is a frustration on both sides of the House with regard to this problem. I reflect that frustration considering that when the previous Administration published the preliminary Cooney report and subsequently the full Cooney report on both occasions did not debate the issue in this House. It was only debated here because of a Labour Party Private Members' motion I tabled at the time, and during that period we had two to three wasted years where nothing of substance in terms of legislation was passed. We would be two years ahead of the game by now if the insolvency legislation had been designed and we had come into government with insolvency legislation in place. Regretfully, that did not happen and the new Government had the job of doing it and because of that there has been a delay. We would all share that frustration.

There is a message that the banks need to receive. Professor Honohan referred to this last week when spoke of the those in the Central Bank tearing their hair out at the lack of action. I am not too worried about the hair on Professor Honohan's head, I am more worried the roof people have over their heads. There are two messages that need to be sent to the banks and this is something about which Sinn Féin Members and other Members need to be mindful. The housing crisis is not a single category problem. There are three categories of people who are in that difficulty. There are people in short-term distress who need some level of forbearance, people in medium to long-term distress who need a more complicated type of forbearance and a third category where forbearance is compounding their difficulty and making matters worse. It is for that third category that the insolvency legislation was designed; it was not designed for the first two categories. It is disingenuous of Members to be confusing insolvency with forbearance. What is at the centre of this difficulty is that the banks are still in denial with regard to property values. I would be very much of the belief that current property values are realistic values. House properties at this time are not undervalued. However, the belief systems of the banks with regard to current values will determine how they will engage with mortgage to rent schemes, split mortgages and other resolution methods.

What we want in the broadest terms to resolve this problem is a normalised housing residential market, one in which people can afford to buy an home and one in which debt is dealt with at a meaningful level. Ultimately, we have introduced measures such as the house price property tax database and the Central Bank has brought in more prudent lending practices and both of those measures have led us towards having a more normalised housing market. This issue must be considered in terms of creating a normalised housing market.

Photo of Eamonn MaloneyEamonn Maloney (Dublin South West, Labour)
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Given the time constraint, I wish to focus on one aspect, which I consider to be an omission in the Private Members' Bill. Like the previous speaker, I welcome the legislation on this matter, regardless of whether it is was introduced by Sinn Féin or any other Member. It is good for the Opposition to continuously highlight this issue. The number of people who are in real trouble in terms of the severity of mortgage debt is relatively small and that is not diminish the issue. However, that must be said and we should be honest about that in the debate. People talk about the issue in general terms as if everyone who has a mortgage in this country is under seize but that is a lie. They are not. Some people are and it should be the duty of those of us, irrespective of to which side of the House we were, to do something in terms of legislation to make it easy for them. One aspect of the Private Members' amendment legislation with which I have an issue is the blanket assumption that everyone who has a mortgage is an ordinary home owner; they are not. At the peak of the boom in this housing market in 2006 120,000 houses were built and half of them were built by landlords. I would be concerned if anyone was suggesting that this Parliament should commit to a scheme that would aid landlords. A breakdown of the figures of the number of people in mortgage debt shows that almost 20% of them are landlords and some of them are multilandlords. We have listened to a dish of it, I am not referring to the Sinn Féin Members on this occasion but to some of the earlier speakers who spoke about this. We had the spectacle last year of one of the members of the highly Technical Group who out in south Dublin sympathising with somebody who had been put out of their mansion who it transpired owned 21 houses. I did not come in here to support people who have 21 houses; I came in here to support people who have genuine difficulties with their mortgage.

6:55 pm

Photo of Tom BarryTom Barry (Cork East, Fine Gael)
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I wish to contribute on the issue of mortgage distress, something with which I have been involved for quite a while. Set into the Irish psyche is the need to own one's own home. This desire was probably ingrained from Famine times when the Tenant Right League began to demand the three Fs, namely fair rent, free sale and fixity of tenure. The rush of a new generation to buy a family home was all-consuming and unfortunately has trapped not only this generation of first-time buyers but also those who sold existing houses to move upwards and onwards. Each group bought according to their disposable income at the time and are now trapped in a financial nightmare.

Strangely enough, the solution which should have worked in 1847 with the three Fs might work here through split mortgages or parked percentages of mortgages. Fair rent equates to a fair payment, to what the mortgage payer can pay in terms of principal and interest. Fixity of tenure holds that as long as the person can actually pay what has been agreed, he or she will not be evicted. Free sale refers to an ability to sell a house with whatever tie-in it has on it. It is very important for us to remember that this issue must be pursued. The banks are doing that and I am dealing with them a lot in this regard but they are only getting through 1,500 cases per month. They must be given the resources to make sure that we can get through each individual case of mortgage distress because the fear of losing one's home is all-consuming. We must reach a point where each person is dealt with on the specifics of his or her own case.

This situation will not go away and not reaching a decision is simply kicking the can down the road. Debt write down may be necessary in some cases, while in others it may be possible to spread payments over a longer period of time to enable people to pay their debts. Either way, we must grasp the nettle and work on it. In fairness to the banks, they are engaging and the Irish pillar banks are doing a lot better than some of the foreign banks, which must be acknowledged. The skills for dealing with this crisis must be developed. I appreciate this issue being raised because it is one of the largest crises facing this country. Until we get this right, we will not be out of trouble. We will be judged as a Government on how we deal with people, fairly and equitably.

Photo of Dan NevilleDan Neville (Limerick, Fine Gael)
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I welcome the opportunity to contribute to this debate. I wish to highlight the link between serious difficulties with mortgage arrears and debt and mental health problems. A phenomenon known has debt depression has been identified and is of growing concern. It calls for special mental health training for the staff of banks and debt collection agencies. Some of the banks are making efforts to work on this but progress is very slow in terms of bank staff understanding the difficulties, pressure, hopelessness and despair of many people who have mortgage difficulties. We all know how distressing it is for people to lose a home or to be in fear of losing it. It creates extreme stress, especially if such people also have the stress of having lost their job, which can create difficulties with self esteem. Such stress can give rise to problems within families because of changed circumstances. Families and relationships suffer and no matter how much parents try to protect their children, it can be impossible because the bad vibes, difficulties and stress are ever-present. This often leads to people in such situations taking solace in alcohol or drugs. Unfortunately, some go into even deeper depression and take their own lives. It was noted a year ago that 30 developers had taken their own lives because of the difficulties they experienced. One can be very flippant and can rightly criticise people but the level of serious mental distress and mental difficulty that people are experiencing because of debt cannot be underestimated.

It is important that staff of banks and debt collection agencies have a greater awareness and be trained to identify and deal with these situations and to respond appropriately. A person came to me who had very successful life in the recent past, with a very good job, a very nice house in a nice area and the only thing he wanted was a medical card. He could not pay his debts. His former lifestyle was gone. His wife was reduced to working a three-day week and he was claiming unemployment benefit. He had been a senior executive. We cannot judge people on the basis of their previous lifestyle. The depressive situation with regard to mortgages goes across all sections of society. We must recognise debt depression for what it is and be aware of how necessary it is for those who are dealing with people in crisis, whether because of mortgage or other debts, to be trained to understand, identify with and respond to what comes before them.

Photo of Seán KyneSeán Kyne (Galway West, Fine Gael)
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It goes without saying that unsustainable over-indebtedness is one of the most significant problems facing us today. One characteristic which has exacerbated this recession is the high level of personal debt of many people. One can observe the very human trait in many of us of ignoring a problem in the futile hope that it will go away, whether that be a health issue, a work-related issue, a relationship issue or, in this case, a financial issue. However, it is clear from experience that such problems rarely go away or sort themselves out. Instead, they grow, fester and worsen.

Unfortunately this approach was the one adopted by previous Governments with regard to the mortgage arrears crisis. Anyone who suggested that Ireland may have a problem with over-indebtedness was ignored or rebuked as a doom merchant. Anyone who raised concerns about an unsustainable property bubble was shouted down with false assurances of a soft landing ahead. This ignorance and indeed, arrogance, left the State in a much weaker position and ill-equipped to deal with the problem of over-indebtedness. When the recession's grip took hold it was not long before the realisation suddenly dawned that a Victorian-era personal debt system was of little use or benefit in 21st century Ireland.

Since my election to this House I have obviously come into much greater contact with the legislative system, the law-making process, Oireachtas Standing Orders, procedures and so forth, none of which has been designed for speedy solutions. In fact, the legislative process can be frustratingly slow and even more so for the citizens in need. One of the most demanding challenges can be that of trying to implement change while ensuring that a system keeps functioning. However, there is no excuse for the absence of any meaningful personal insolvency legislative reform over the last decade or more. The ideal time to reform systems, such as the social welfare system for example, or legislation, is when demand is low but I suspect there is little to be gained from dwelling on this oversight now. The Oireachtas must learn from this and I believe that the Government and the Minister for Justice and Equality, Deputy Shatter, are providing a lead by example with the radical new Personal Insolvency Bill. I also believe that this Bill, coupled with a new focused and fair approach by the financial institutions, all of whom owe their existence to Irish citizens, represents a hugely important step in addressing the mortgage arrears problem. Specifically with regard to mortgage-related debt, the new personal insolvency arrangements will be of great benefit in tackling unsustainable debt outside the court system. It is a less judicially-focused system that will, I am certain, prove to be a more consensus-based alternative to bankruptcy.

When the Minister of State at the Department of the Environment, Community and Local Government, Deputy Jan O'Sullivan, appeared before an Oireachtas committee recently I referred to an easy-to-implement system of transferring NAMA stock in lieu of unpaid development levies to try to get a social dividend for local authorities. The Minister of State said at the time that she would examine that possibility and I ask her to elaborate on that if possible. It would enable local authorities to work through their housing lists much more quickly and avoid one of the worst social problems, that of homelessness, by providing a home for those who need it.

When NAMA came into existence I was a member of a local authority and thought there would be a bonus to local authorities in terms of land banks, unfinished estates and so forth being transferred to sort out the social housing problems that exist in so many areas.

In my area, due to the cost of housing and the value of land, local authorities have been unable to access affordable building land to provide social housing for those in need.

I hoped at the time, and I still hope this suggestion can be considered. I ask the Minister of State to do that.

7:05 pm

Photo of Sandra McLellanSandra McLellan (Cork East, Sinn Fein)
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The Swiss architect, Le Corbusier, famously once described a house as a machine for living in. The machine metaphor and the capitalist undertones embedded within it provide a clue to what can happen when the machine itself becomes the perceived source of financial power, speculation, and class status. When this happens, a clear disjuncture emerges between the house as a machine and the notion of the house as a place in which we engage in the art of living.

Since the foundation of the Irish State, successive Governments, through policies and financial inducements, have fostered, and supported private home ownership. That this would be the case was not however a foregone conclusion. The new State, in choosing the so-called free market as the dominant reference point for housing rejected the Sinn Féin Democratic Programme, which was the socially progressive blueprint of the independence project. Instead, the State's approach to housing is characterised in economic terms by austerity and fiscal rectitude and in ideological terms by a conservative nationalism that was both elitist and anti-urban. Thus from the 1930s on we see a series of Government policies and initiatives which give primacy to home ownership.

The State reaffirmed this commitment when, in Article 42 of the Constitution, it copper-fastened into law the special place of private property. In this sense the early work of building the nation is deeply entwined with the values associated with private ownership. Put another way, possession or ownership becomes equated with citizenship or at the very least in the State's eyes with the good or model citizen.

In this vision, the urban and rural working class are relegated to second class status and deliberately excluded through Government policy from the material benefits of the State, by the State. Thus, from the 1930s on we see a process whereby successive Governments subsidise private builders with public money in order to make private housing affordable for the new middle classes. In this scenario private home ownership becomes synonymous with status, respectability and moral character.

Conversely, public housing is associated with social inferiority, low socioeconomic status and the working classes. In terms of employment, education, status and life chances, consignment to the local authority sector was the gateway out of society and not the passport in. Right across urban Ireland we see the spatial manifestation of this inferiority in the post-war public housing estates of Dublin, Limerick and Cork. The State's decision to sell off a significant portion of the public housing stock in the early 1970s has its origins in this State-centred middle class bias. As a direct result of this policy the public housing stock is seriously depleted and public housing is now seen as the cause of poor quality of life for its tenants, rather than as a guarantor of their security from it.

Thus, during the so-called boom years when a house became a commodity to be traded with the aim of making a profit, private housing wealth, housing poverty and affluence existed side by side and we had, to paraphrase John Kenneth Galbraith, the existence of public squalor amid private affluence.

Today, there are almost 100,000 people on housing waiting lists and another 94,000 who are in receipt in rent supplement at a cost to the State of almost €500 million. Thousands more are condemned to a life in hostels, shelters and B&Bs. To add to this, household financial stress is at unprecedented levels as seen in the extraordinary rate of arrears in owner occupied mortgages. These figures, taken together are shocking.

However, if we just cast our eyes in the doorways and laneways within minutes of this House we see the homeless women and men, most of them young, who are testament to the failed policies of this and previous Governments. A state that cannot house its own people is a failed state. Even worse, a state that refuses to recognise that housing is a social utility and not a commodity, that it is a fundamental part of the socialisation process, is also a failed state.

Unlike the parties of the right, however, Sinn Féin believes now, as we did back in the days of the Democratic Programme, that the State has a responsibility to house all of its people. We believe that all housing, be it public or private, is essentially social and that housing should never be viewed or used as a commodity for profit.

Photo of Pádraig MacLochlainnPádraig MacLochlainn (Donegal North East, Sinn Fein)
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It is ironic that you are chairing this session, Deputy Mathews, being one of the people who warned about the huge challenge of private mortgage debt in the State. You have evangelised about this issue for a long time.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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I am glad to be in the Chair.

Photo of Pádraig MacLochlainnPádraig MacLochlainn (Donegal North East, Sinn Fein)
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The first section of the Sinn Féin motion refers to housing. A lay person looks at all of this in bewilderment. Not so long ago, turnkey housing developments were being sold at full market value throughout the State. Now, houses have halved in value. There is a simple economic rule of thumb that at a time of recession the government should intervene, first, because it creates jobs, second, because it gets the best possible deal for the taxpayer and third, because it prepares the economy for the turnaround. We should be buying houses now. We should purchase all those ghost estates for social housing because they are coming in at half the price of years gone by. We are not doing that.

Instead, we are opting for ten year leases, which is a crazy economic proposition for the taxpayer. This is because of the absence of an overall strategy. Sinn Féin has said repeatedly that we could look at the National Pensions Reserve Fund, twinned with the European Investment Bank potential and private pension funds. It is not only Sinn Féin which says this. It is also proposed by the Irish Congress of Trade Unions. Sinn Féin talks about a €13 billion stimulus package over four years. A key aspect of that would be the provision of social housing. There are solutions, if we are brave and imaginative enough to look at them.

There are 100,000 people on housing waiting lists at this stage. This is a real crisis, and it brings me to the next section of the motion. A previous speaker said mortgage distress affects only a small number of people. That is an incredible statement for a Deputy to make. One in four mortgage holders is in distress. That is approximately 168,000 households. If we took just one representative from each of those households we would fill Croke Park twice. That is the scale of the crisis. Any Deputy who has their finger on the pulse of their community and listens to their constituents knows this is a crisis. I could talk for the next two hours about conversations I have had with families in Donegal and about people who ring me late at night in total dismay and distress asking if they should hand back the keys of their house. They put impossible situations to me.

These people are just ordinary five eighths, like me. They were not experts on the economy a number of years ago. We believed the economists and our politicians at that time. We believed all the hype in the newspapers. One could not open a newspaper without seeing a property supplement. We read about soft landings. Prices could only go up. We should buy while prices were at that level. We would be crazy not to. That is what people bought into. They were betrayed and they remain betrayed because there is no solution.

This brings me to the final issue in the motion. I sat through 17 or 18 hours of debate on the various Stages of the Personal Insolvency Bill. On the final night, something symbolic happened. The so-called public interest director of Permanent TSB, Mr. Ray MacSharry, told my colleague, Deputy Pearse Doherty, there would be no write-downs. Later, Professor Patrick Honohan, Governor of the Central Bank, said he was tearing his hair out because the banks will not go after debt.

People at home must be totally bewildered. We have put tens of billions of euro into these banks.

Today AIB has stated it will increase its variable mortgage interest rate but we own 100% of that bank. People are bewildered that there was a solution for the bondholders, for the extremely wealthy gamblers who were so reckless, but the people themselves have been betrayed. One in four mortgage holders is in difficulty. This crisis is fundamental and must be addressed in a focused, urgent and determined fashion. Our motion does not just identify the problem, it offers solutions, as Sinn Féin motions always do. At some point someone must listen and realise the emperor is wearing no clothes.

7:15 pm

Photo of Gerry AdamsGerry Adams (Louth, Sinn Fein)
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The Government is failing the tens of thousands of families in mortgage distress and on social housing waiting lists. In October, Fiona Muldoon, the head of banking regulation in the Irish Central Bank was scathing in her criticism of the bankers and their failure to address the issue of mortgage distress. This morning AIB indicated that it plans to increase its variable interest rate once more. That will directly impact on 70,000 customers. A 0.25% rise in interest rates adds €30 per month to the cost of repayments on every €200,000 borrowed. That is €30 many of these families do not have.


AIB is fully owned by the State and the Government is refusing to deal with this issue in the way it should. It seems to be fine to give €64 billion of taxpayers' money to the banks but it is not okay to help citizens in mortgage distress. Sinn Féin is of the view that the Government should intervene directly to tell AIB that its planned rate increase is not acceptable.


Fine Gael and the Labour Party came to power promising to prioritise those in mortgage distress. Instead it has abandoned them. By complete coincidence, on this very day two years ago, the Labour Party told people in mortgage distress that if it was in government, they could enjoy peace of mind. The Labour Party leader, Deputy Eamon Gilmore, said that the banks had already received thousands of millions in taxpayers money and there must be a quid pro quo, which was to give people in mortgage distress a breather. I did not make that up, it is what the current Tánaiste said. It is yet another broken promise. Today, there are more citizens than ever in mortgage distress. There are 180,000 households currently in trouble, with 115 additional homeowners falling into distress every day. I often wonder what exactly is the point of the Labour Party being part of this Government, with this Government's record?


The personal insolvency legislation will not fix this problem. It hands a veto over any personal insolvency arrangement to the banks. As long as the banks have a veto, why would they not exercise it? If the Government gives it to them, they will use it in their own self-interest.


I also want to deal briefly with the issue of social housing. The policy of the Government in depleting the social housing stock is exacerbating the crisis in housing and the numbers of citizens on waiting lists. My constituency office, like that of many other Deputies, is dealing with increasing numbers of people who have been forced to leave what was the family home. Sometimes this is because of relationship breakdown and in some cases it is due to domestic violence. These same citizens then have difficulty accessing supplementary welfare allowance or rent allowance because they are often not accepted onto local authority housing lists as they are deemed to have vested financial interests in family homes which they no longer occupy. In her long involvement in politics, I am sure the Minister of State has dealt with this herself.


There is a lack of clarity in this area and a disparity in procedures between local authorities. The Minister for the Environment, Community and Local Government must empower and resource local authorities to effectively assess such applicants. He must set out a clear policy to deal with such applicants and establish mechanisms to allow for compassionate and psychological factors to be part of the assessment process.


In a real republic citizens would have the right to a home. This is not a real republic, as we learn every day, it is, as was said by a historian many years ago, a dictionary republic. The Labour Party, with that name, should aspire to protect citizens, safeguard their rights and ensure that they have a home. This motion proposes measures that can significantly contribute to ending the current crisis in housing. I commend it to the Dáil.

Photo of Seán CroweSeán Crowe (Dublin South West, Sinn Fein)
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There is general agreement across all the parties that there is a crisis in housing. The extent of the crisis might be a point of difference but every day in my constituency office, the majority of people are coming in about issues related to housing. Many of those issues relate to mortgage distress and the people who are coming in are looking for advice and solutions. The general consensus is that the current supports that are in place are not working. They come to us to plead for a way to save their homes. They are worried sick, unable to sleep at night.

The other problems we hear a lot about relate to social housing. In my area the list is getting longer. If the person loses his home, there is a waiting list to see the housing office to get on to the list and then there could be a wait of up to six years.

One of the most obscene things that happened as a result of the madness of the property boom is that there is empty accommodation across the State under NAMA when there are people sitting on the housing lists for years. There are no ghost estates in my area but there is empty accommodation. I do not know if it would be suitable for families but it would be suitable for students and young nurses working in the hospital. There are plenty of people who need accommodation who cannot get it at the moment. It is obscene, therefore, that accommodation is lying empty. People cannot understand that.

Some Members and journalists would rubbish the call for a housing programme where we would start building houses but there is a need for housing in this city. There is a need for local accommodation and a roll-out of social housing. We know that housing stock has shrunk so this problem exists across Dublin. We have put forward solutions, such as write-downs of a portion of mortgage debt among other options. There could be more direct action by the Central Bank to force lending institutions to adopt a more lender-friendly approach to the mortgage crisis. NAMA should have to contribute to the social and economic development of the State by providing more housing units from its portfolio that would be suitable for social housing. There must be a plan to commence the building of at least 5,000 units by the end of 2013, with a further 4,000 by the second half of 2014. That ticks all the boxes in that people get accommodation and jobs are created. It also fulfils the basic right to housing. Deputy Adams is right - surely a basic tenet of a republic should be that a person should have access to a roof over his head? We know to our cost the number of people who feel there is nowhere safe for them to go, with many of them ending up homeless as a result.

This is a genuine attempt to address a problem that faces us as a society. What we are doing now is crazy. People are critical of the actions of speculators but instead of giving people a home through a programme of social housing, we are putting more and more money into the pockets of private landlords. There is a lack of inspection of private accommodation and there are numerous difficulties that people face in the private rental market. Most of all they will never have a permanent home where they can settle and raise their families.

We need a great deal of support here. That is basically what we are saying. My party's motion speaks of supporting those who are in the middle of this crisis. It is a genuine attempt. No one should engage in partisan politics in this regard. If we are doing our job as political representatives, we should know there is a crisis out there.

7:25 pm

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

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

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

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

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

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

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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I call Deputy Ó Snodaigh, who has three minutes.

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Is it two minutes?

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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Deputy Ó Snodaigh's colleague saved one minute, so he has three.

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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I will take two minutes and Deputy Ross will have three minutes.

Photo of Peter MathewsPeter Mathews (Dublin South, Fine Gael)
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Yes.

Photo of Aengus Ó SnodaighAengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Cuireann an leasú atá curtha faoinár mbráid ón Rialtas díomá orm, ach go háirithe an páirt i leith tithíochta sóisialta. An bhfuil an Rialtas dall ar an ghéarchéim thíthíochta atá ann? Ní dhéanfaidh an freagra atá ós ár gcomhair anocht ach cur leis an fhadhb atá againn.

On social housing, I laughed when I saw the Government amendment, especially since it speaks of permanent new social housing and then goes on to list how the State will further subsidise private landlords in this State with temporary leases. That is not a permanent solution. It is not a solution at all, given that 42% of private rented accommodation does not even meet minimum standards. The realistic solution is to provide direct funding to local authorities to build or purchase permanent social housing for the nearly 100,000 households on the housing list. As well as cutting the rent allowance and leasing bills, it would stimulate local economies, give a source of income to local authorities and regenerate the wastelands left by the previous Government which allowed the collapse of regeneration schemes in my area and others in the city and country.

Coupled with this, there is a need for a constitutional change to allow for a "use it or lose it" clause for derelict sites or derelict homes. The free transfer of empty apartments and houses held by NAMA to local authorities would also help address the social housing needs of struggling Irish families much more quickly and permanently than by subsidising the landlords and speculators, many of whom caused some of these problems in the first place.

In my area of Bluebell, there is an empty shell of an apartment block. Nearby, in Inchicore, there is the collapsed St Michael's regeneration project, and a large, brand new apartment block next door to that is also empty. There is a collapsed regeneration project in Cherry Orchard, and several derelict sites which Dublin City Council earmarked in the constituency for senior citizen accommodation to replace the pokey bedsits many of them are in at present. Also in the area are stalled large-scale regeneration projects in St. Teresa's Gardens and Dolphin House. Investment in any of those projects would create local jobs, stimulate the local economy, address dereliction and, most importantly, provide homes for the homeless and for those living in overcrowded or inappropriate accommodation.

Photo of Shane RossShane Ross (Dublin South, Independent)
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The recognition of this problem, which was identified by the motion from Sinn Féin this evening, has been a long time coming. It is staggering that the Government, as Deputy Tóibín stated, has allowed this problem to double in size since it took office, sitting fiddling while the mortgage fire burned.

It was not only Fiona Muldoon who warned about this in November last. As recently as two weeks ago, the Governor of the Central Bank stated he was tearing his hair out at the failure of the banks to tackle this problem. By implication, he was also tearing his hair out at the failure of the Government to tackle this problem, because the two of them are colluding in allowing the banks to keep on their balance sheets house values that are unrealistic and, thereby, under provision for bad debts. We saw this previously in the case of the developers. This is only history repeating itself in another form because the mortgage arrears problem is simply the second pillar of the Irish debt problem. The first pillar is being tackled - admittedly, in a fairly haphazard way - but the second one has not really been tackled at all. The reason it is being tackled now is not that there is any great political will or courage. It is because there are stress tests down the line this year. The stress tests, in October, are quite likely to come to the conclusion, because of the Government's refusal to recognise the mortgage arrears problem, that the banks will need further recapitalising. If that happens, where is the money to come from? We see no answers other than piecemeal ones such as talk about split mortgages and the Personal Insolvency Act 2012, which does not have the capacity to sort out a problem of this size. That is why it is so important that we get a serious reply and seriously constructive suggestions from the Government for tackling this problem, which is out of hand and will get worse. When the property tax invoices come through letter boxes of at the end of May and the payment date for the tax arrives in July, borrowers will begin to regard mortgages as an optional extra. I predict that borrowers will look at their property tax bills and say that they cannot pay it but, because the Government is confiscating it through the Revenue Commissioners, they will take the other option and stop paying their mortgages.

The Government is not facing up to this problem and it must do so immediately. The result of its policy will be more recapitalisation and where the money is to come from will be an interesting question and one to which I would like to see an answer this evening.

7:35 pm

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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This has been a very useful debate and I thank Sinn Féin for raising these issues. However, the Government is dealing with the consequences of the previous Government's policies and belief system which were pro-cyclical, reckless lending and very poor regulation. Unfortunately the consequences have been very painful for many of our people. We are trying to deal sensitively with those experiencing severe mortgage arrears and to identify innovative ways to meet social housing demands at a time when the public funds available to that end have never been scarcer. I would love to have the kind of money to implement the various Sinn Féin suggestions, but we do not have that money at the moment and we have to deal with the problem as it faces us know. Deputy Ross is very good at describing the problem, but I have not heard too many solutions.

Photo of Shane RossShane Ross (Dublin South, Independent)
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It gave us more time.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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We have introduced solutions, including the Personal Insolvency Act and we are continuing to keep the pressure on the banks.

Photo of Mattie McGrathMattie McGrath (Tipperary South, Independent)
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They have a veto.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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That area is very much at the top of the Government's agenda. We have fundamentally redirected policy in this area, for which I am responsible, in developing a sustainable housing policy, which, first and foremost, recognises the mistakes that were made in the past. Our housing policy statement published in June 2011 emphasises choice, equity across housing tenures and delivering quality outcomes for the resources invested. Equity across housing tenures includes the rented sector Deputy Ó Snodaigh mentioned and the various measures we have taken to ensure better quality.

The financial parameters in which we will be operating for the coming years rule out a return to very large capital-funded construction programmes by local authorities at least in the near future. As such, there is no single solution to increasing the level of social housing supply and flexible and diverse approaches are required. These approaches include a continued focus on the social housing leasing initiative and other flexible funding models that deliver social housing solutions in the here and now. While Opposition Members may not like leasing it means we can deliver now many more houses to people on housing lists than we could by any other method. It does not mean it has to be the method forever, but for the moment it is a method that delivers. The approaches also include further transfers of tenants from rent supplement to the rental accommodation scheme, which is important; working with a range of public, private, voluntary and co-operative housing bodies on innovative approaches to provision of social housing; gaining a dividend for social housing where possible from vacant and unfinished properties and from the overhang in the property market; and obtaining a social dividend from NAMA - I accept that has been very slow but it will certainly speed up this year.

The Government is also committed to developing other funding mechanisms that will increase the supply of permanent new social housing. Such mechanisms will include options to purchase, build to lease, the sourcing of loan finance by approved housing bodies for construction and acquisition. I am open to any reasonable suggestions from both sides of the House.

Regeneration is by no means dead. While there are problems in some of the Dublin regeneration sites, regeneration is certainly continuing in certain parts of the country. I am also working on stimulus and a targeted programme to improve the energy efficiency of existing local authority housing stock could be a real win-win in terms of protecting the State's investment over decades and creating real employment activity as well as improving people's lives. We are working at refurbishing and retrofitting works which are labour-intensive and will improve the social housing stock.

In 2012 my Department invested approximately €150 million in improving the existing social-housing stock with €100 million invested in the physical and social regeneration of large estates and flat complexes in disadvantaged communities in seven cities and towns around the country. We have spent approximately €52 million over two years on enhancing the energy-efficiency standards of local authority housing. However, much more could be done and I am engaging with my Cabinet colleagues to put together a package of measures to extend the benefits of energy-retrofitting measures.

In working to meet housing needs, I wish to refer in particular to something mentioned in the motion - the accommodation needs of Travellers, a section of our society which experiences particular problems, and as we have sadly witnessed in recent weeks downright discrimination and racism regarding social exclusion and disadvantages. I emphasise the State's commitment in this area which has been backed up by a spend of over €190 million on Traveller-specific accommodation since 2005. We are continuing to protect funding in that regard. Deputies will appreciate that in addition to Traveller-specific accommodation, the vast majority of Travellers are also accommodated in standard social housing which is funded by my Department's local authority housing programme. The 2011 annual count of Traveller families identified only 3.4% of families were living on unauthorised sites in 2011 - it was a much larger figure in the recent past.

Providing a sustainable framework for future housing policy is a priority for me as Minister of State. That will not be achieved by pie-in-the-sky economics or by ignoring the damage previous administrations inflicted. It will be achieved by working in partnership with many sectors to deliver homes for people, not profits for speculators. I will work with Deputies from all sides of this House to achieve that goal.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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The only people engaging in pie-in-the-sky economics are those on the Government benches. Only a pie-in-the-sky formula would leave families across the State in limbo, struggling with mortgage distress and default, and hobbling along on interest-only arrangements with the banks.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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We are working on it.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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In its term in office the Government has engaged in what can only be described as gesture politics because it knows there is a big crisis with mortgage debt, as we all know.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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That is why we brought in-----

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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It knows it needs to do something but is not prepared to grasp the nettle. It introduced a personal insolvency framework that leaves a veto with banks. What kind of craziness was that? It probably knows - I hope to goodness it knows - that there is a requirement for write-down which is the only way they can become sustainable. However, it is not prepared to say that out loud and face that reality, and it is not alone. Whether the Governor of the Central Bank, Professor Honohan, has torn his hair out or not is a matter for himself, but he also is not prepared to set targets for the financial institutions to instruct the banks clearly that they need to deal with these distressed mortgages and to map out an acceptable pace in which those resolutions can take place. The Government's failure is the lack of an appropriate legislative framework to free people from the nightmare in which they find themselves in unsustainable mortgage debt. The failure of the Central Bank and its Governor is in not asserting itself with the banks and to inform them clearly that it is not acceptable to us, the taxpayers, that the very banks we have bankrolled and recapitalised would snub their noses at the citizens in this way.

The Minister of State spoke about choice. There are families with no choice; those who cannot meet their mortgage repayments and go into default do not have choice. In addition, it is a source of scandal that more than 100,000 applicants are waiting to be housed by local authorities. That is much worse than even in the early years of this State. What is the Government's answer for them? It is that they should hang on a little longer or to go into rented accommodation, much of which is so below par that it is a joke.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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That is why we just introduced standards, including for bedsits that Deputy Ó Snodaigh mentioned.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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In my constituency I invite the Minister of State to visit the private rented accommodation along the North Circular Road, for example. I invite her to visit the bedsits in which people live.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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We have actually done that in the North Circular Road.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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I invite her to view the squalor in which citizens of this Republic live in 2013.

I then ask that she review her rhetoric as regards choice. That is no kind of choice. It is in fact a kind of misery.

7:45 pm

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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Deputy McDonald is not the only one who visits houses.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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On review of this Government record in office thus far, it would be fair to say that it lacks any coherent policy or approach in respect of homes and housing. The only coherent measure which it has brought forward is its property tax. Not satisfied with the misery of mortgage holders and people in distress, or with the substandard condition of local authority and private sector housing, this Government believes the smart thing to do at this stage is to tax the family home of those who are managing to keep a roof over their heads.

Photo of Jan O'SullivanJan O'Sullivan (Limerick City, Labour)
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The Deputy has a selective memory of what we have and have not done.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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This is not choice or coherence rather it is a Government in denial, a Government prepared to turn its face away from the needs of its citizens and slavishly follow the instructions of the troika and its European partners rather than face up to and deliver on the needs of citizens.

Photo of Caoimhghín Ó CaoláinCaoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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I made the point many times in the previous Dáil that Government housing policy was market-driven rather than based on the right to housing and on meeting the social need for accommodation in Ireland. Sinn Féin, as well as other progressive voices, including some from the Labour Party benches when in opposition, were making those points long before the property bubble was allowed to inflate and inevitably to burst. If the demand for a real and effective State housing policy had been listened to we could have avoided the worst of the economic collapse. We would have seen the construction of quality and well-planned local authority housing on a wide scale, a control of house prices and a more diverse economy not over-reliant on the construction sector. We would have seen affordable housing in the private sector and mortgages that did not burden people from the start of their working lives to the grave. All appeals for a sane, sensible and fair housing policy were, the Minister of State is correct, ignored by three Fianna Fáil-led Governments. The results are all around us today, including economic collapse, massive toxic bank debt, widespread mortgage distress, a dire shortage of local authority housing and severe hardship for many tenants in the private rented sector.

The Tánaiste, Deputy Gilmore, as Labour Party leader in December 2008, put forward a comprehensive Private Members' motion in the Dáil, which was in many respects similar to the Sinn Féin Private Members' motion we are debating tonight. It noted "the failure of the Government to honour the commitment contained in the programme for Government to expand delivery of social and affordable housing options to meet the needs of 90,000 households." Two years of this Government in office, what do we find? As stated in this motion, since 2011 this Fine Gael-Labour Party Government has cut spending on housing by 19% to €585 million, leaving local authority housing desperately under-funded, resulting in 98,318 families on waiting lists for local authority housing in this State, which is a significant increase on what pertained only a few short years ago.

To address this crisis Sinn Féin is asking the Government to develop a plan to commence the building of at least 5,000 housing units by the end of 2013, with a further 4,000 houses to be built by the second half of 2014, including the use of social housing bonds to fund these projects. We are not asking the Government to go as far as the Labour Party motion of 2008, which sought the construction of an additional 10,000 social housing units each year for three years. The sad fact is that this Government is continuing with the housing policy of its predecessors. A different era requires a new policy, which has not been forthcoming from this Government so far. I add the words "so far" because I do not deny or doubt the Government's sincerity in wanting to see this issue addressed. I genuinely hope the situation will change.

A new drive for social housing is essential. Equally essential are comprehensive measures to address mortgage distress. Nobody in this Dáil, who genuinely represents people, can be blind to the reality of mortgage distress in this State. Masses of people have been left with the toxic legacy of the inflated property bubble. This Government has taken minimal action to alleviate the problem. On the contrary, it proposes heaping debt upon debt with its inequitable family home tax. I strongly urge the Government to undertake the measures outlined in the Sinn Féin motion, including the removal of the veto given in the Personal Insolvency Act 2012 to lenders over proposed insolvency agreements; to prioritise the maintenance of the family home in any agreements dealing with residential mortgages; to provide in the legislation for the independent adjudication and enforcement on mortgage distress cases, including the possibility of write-downs on portions of the mortgage debt, as well as other options such as debt-for-equity swaps, mortgage-to-rent and short selling when reaching mortgage restructuring agreements; and to take more direct action with the Central Bank to force lending institutions to adopt a more proactive and lender-friendly approach to the mortgage crisis. I do not care who pulls their hair out: I am past that point.

The taxpayers of this State are bailing out banks and bondholders to the tune of billions, in return for which all hard-pressed mortgage holders are getting is zilch. It is time, and long past time, that this Government acted like a Government for the people and called the banks to account. I genuinely believe it must recognise the need for this to be done.

Photo of Dessie EllisDessie Ellis (Dublin North West, Sinn Fein)
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First, I thank all Deputies who contributed tonight and last night to this important debate. While we have had our disagreements, the discussion has been mostly cordial. Although the Government has tabled a counter-motion, which is disappointing, the discussion has highlighted the seriousness of the problem. It is no longer good enough for the Government to say it inherited this problem from the previous Administration. To continue with the same tactics and approach as the previous Government is disappointing.

It was reported today that AIB is to increase its variable interest rates, which will affect 70,000 households. If proof was needed that the banks are immune to the difficulty faced daily by struggling mortgage holders this is it. This move by AIB should be a call to action by this Government to allow an independent body to impose settlements on banks. Action has been promised again and again but the figures show these promises have not been lived up to. Sinn Féin has repeatedly shown that there is an alternative. We are tired of reminding the Government that there are alternatives. We have worked hard to give this Government options which we felt it could support. However, these proposals have fallen on deaf ears.

Last night and tonight we again made the plea for Government to listen and to work with us on finally beginning to resolve these outstanding issues which worry the people of this State every day. Equivocation by the Government and its failure to take decisive action has, unfortunately, added to the crisis. Action is required. The first step now must be to revisit the Personal Insolvency Act and remove the veto from the lenders. As long as the lenders have a veto there is little reason for them to seek fair compromises. We are calling for independent agreements on mortgage distress to be decided by a mortgage restructuring panel appointed by the Minister. This panel would be empowered to act as an arbitrator with the authorisation to impose on both parties agreements aimed at prioritising the protection of the family home.

Sinn Féin accepts that neither Fine Gael nor the Labour Party created the serious problems we face, particularly in the case of the social housing shortage. However, it now falls on them to address the problem. The crisis was a collaboration of most Governments since the early 1980s, which sought in the best traditions of Thatcher to push private ownership over public provision, not in the interest of improving the conditions of housing for working people but in order to remove the State's responsibility for housing.

We differ from the main parties because Sinn Féin believes housing is a right. Five years ago in the House the Labour Party co-signed a motion with Sinn Féin calling for the construction of 10,000 social housing units a year for the following three years. This was against the backdrop of falling revenue and a housing crisis which was moderate in comparison to the one we face today, with 60,000 on waiting lists then rather than the 100,000 today. Back then the Labour Party had not given up on large-scale social housing projects, but, of course, it had not yet been shackled and dragged to the right by Fine Gael. It is hard to believe we are dealing with the same party.

Yesterday evening the Minister of State, Deputy Joe Costello, told us the Government was on target to deliver numbers similar to that called for in the motion. That is not correct. The numbers may be similar, but what they represent is completely different. The Minister of State's numbers represent more stop-gap measures but no solutions. The motion calls for the commencement of a building programme to deliver 9,000 homes in approximately two years. These would not be new social housing leasing opportunities which would make private profit at public expense and revert back to the hands of developers; properties rented or bought on credit by voluntary bodies which they could not be sure they could afford; shared ownership homes which would be surrendered; be for new rent supplement recipients, or people participating in the rental accommodation scheme. This is a proposal to build real social housing.

This discussion has been very worthwhile. We have heard many ideas and put forward our own on how to look at the housing issue. I hope the Minister of State, Deputy Jan O'Sullivan, will take them on board. During the debate we have mentioned the homelessness crisis and the problems faced in dealing with it. We also have a crisis on our hands with regard to mortgages in distress. I ask the Minister of State to try please to address it.

Amendment put:

The Dáil divided: Tá, 76; Níl, 46.

Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Dessie Ellis.

Níl

Amendment declared carried.

Question put: "That the motion, as amended, be agreed to."

The Dáil divided: Tá, 77; Níl, 47.

Tellers: Tá, Deputies Emmet Stagg and Paul Kehoe; Níl, Deputies Aengus Ó Snodaigh and Dessie Ellis.

Níl

Question declared carried.