James Bannon (Fine Gael)

I welcome the Minister of State. In the tried and trusted manner of being suspicious of Greeks bearing gifts, however, I am wary of his presence to discuss the Building Societies (Amendment Bill) 2006. This is legislation that could be classed as a time bomb.

Once again we are faced with undue haste on the part of the Government, following a marked dragging of its heels in bringing this legislation forward. A Bill is yet again being pushed through in the final days of the session. We must bear in mind the truism that rushed legislation is bad legislation. Moreover, rushed legislation that is slipped in towards the end of a session tends to be legislation that is beneficial in some way to the Government. We are told that this is merely a technical Bill. However fitting it might be to dispose of a technical Bill in two and a half hours, this Bill does not fall into that category.

Not only is it being stream-rolled with unseemly haste through the Seanad but it seems to carry a history of secrecy and even cover-up. Its provisions are based to a large extent on the recommendations of the building societies review group. Those recommendations were never made public because they were deemed too commercially sensitive. This seems strange given that such concerns should play no part in guiding the actions of the Oireachtas.

Without wishing to cast any aspersions, it is open to interpretation as to who exactly this Bill will benefit. There have been claims that the winners will be one particular building society and several of its senior employees. Despite supporting this legislation in principle, I will not be involved in passing any Bill that could be interpreted in such a manner. We must give careful consideration to any inference of this legislation which could be open to such interpretation. Apart from intimations of cronyism, any legislation that is rushed in this manner is open to suspicion. The dying days of a dying Government see strange happenings, but caution is indicated for those who must pick up the pieces.

We are presented with the unacceptable scenario that all Stages of the Bill must be passed in two hours and 30 minutes. It was similarly rushed through the other House. I remind the Minister of State that this is a parliamentary democracy and that this House should not be treated with such disrespect. The Government was unbelievably slow in bringing forward this legislation, which has been on the agenda for years. After such delay, it suddenly moved at breakneck speed. While I realise the hurry that many members of Irish Nationwide are in, the Government should have allotted sufficient time at an earlier juncture for the Oireachtas to debate the legislation. Sufficient time should have been allotted for Committee Stage rather than treating these Houses as a rubber stamp for a fait accompli.

I note that Mr. Brendan Burgess, a long-term campaigner on consumer issues, shares my concerns about this legislation. He has warned that it should not be rushed through the Oireachtas. In The Irish Times of 30 June, he is quoted as saying: "Serious debate needs to take place on this Bill. While we don't want discussion to drag on indefinitely, the Bill is seriously flawed and these flaws have to be fixed". He calls for members of the building societies to be consulted on the Bill's contents.

The Bill provides for the demutualisation and immediate sale of Irish Nationwide. It will also allow the EBS to remain a mutual society, while becoming more like a bank. This would enable the EBS to raise more money for growth and to offer products such as current accounts. I note media commentary suggesting Irish Nationwide plans to appoint corporate finance advisers as soon as the Bill becomes law, while prospective buyers will also become free to consider their options. This, of course, is the dubious nub of the matter. We as legislators are being railroaded into rushing through legislation which, whether rightly or wrongly, benefits commercial interests and this does not rest at all well with me.

The society is expected to sell for €1.5 billion, with interested parties likely to include several banks, including Danske Bank, the owner of National Irish Bank. Everyone in this House will be conscious of the fact that demutualisation will also prepare the ground for each of Irish Nationwide's 120,000 qualifying members to receive a windfall of several thousand euro in the event of a sale.

As the Minister has stated, the Bill allows for the demutualisation of building societies following recommendations of the Building Societies Review Group, which was too commercially sensitive for public consumption. As the Bill has the backing of this group, one could argue that it is safe to say that the measures contained within it are primarily sound and are worthy of support but there is, of course, an aspect of secrecy here to concern us. Indeed, while the Bill is technical in many of its provisions, there are many concerns. I would like to take this opportunity to raise some of them with a view to getting a response from the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Noel Ahern.

The House will, of course, be aware of the many problems associated with Irish Nationwide in recent years. Campaigns have been fought for many years seeking the society's status to be changed to allow for payout. Under historical rules, a society that converted into a plc would have needed to wait for five years before becoming eligible for full sale. This Bill proposes that this five-year rule be removed for societies that have, for the preceding five years, limited their membership to customers who have lodged at least €10,000 to a share account. This is in the public domain.

I draw the Minister of State's attention to the borrowing victims of the actions of Irish Nationwide, which now look set to be copper-fastened by the actions of the Government. The Bill will release a windfall of around €1.5 billion to members, directors and the chief executive of Irish Nationwide. However, some contend that this huge windfall has been built up in large part on the backs of the borrowing victims of the society. Brendan Burgess, one of Irish Nationwide's dissident members, has stated that the Bill would allow the society to demutualise quickly. He went on, however, to describe the proposed legislation as "extraordinarily artificial" because of the way it accommodates "the separate aspirations of the boards of the EBS and Irish Nationwide". I invite the Minister to comment on this and the fact that Irish Nationwide Building Society rejected a proposal at its annual general meeting in May to earn a windfall by converting the institution into a public limited company. At that AGM a motion was tabled calling on the board to proceed immediately with the process of converting the society into a plc rather than waiting for a legal change that would allow its immediate sale. However, more than 80% of members rejected the plan.

The Minister of State will also be aware that Irish Nationwide systematically held back interest rate cuts from existing borrowers while passing on rate cuts to new borrowers. As Brendan Burgess has stated, between 1993 and 2003, interest rates for other lenders fell by 10% in line with Central Bank rates. The Irish Nationwide passed on these cuts to new business but passed on only half the cuts to existing customers. All other banks pass on rate cuts and increases more or less in full and reasonably promptly, despite the public perception to the contrary.

Irish Nationwide Building Society did not notify customers of the rate they were being charged on the notification of rate changes. They did not notify customers of the rate on the annual statements. Borrowers logically assumed that the rate cuts were being passed on. If they discovered the rate that they were being charged was excessive, they could negotiate a one-off reduction or move their mortgage elsewhere. However, the society refused to reduce rates for borrowers in arrears, as they knew that they could not shop around.

The Bill, on the face of it, does nothing for those who suffered under this regime, many of whom are going through the courts process to seek redress. As tends to be the reality with this Government, the Bill will benefit those at the upper end of the financial scale at the expense of the less well off and financially vulnerable. Those lobbying against the Bill have called on the building society, which is being sold on demutualisation, to set aside a fund which would be administered independently of the society and the purchaser to resolve all outstanding claims against the society. If the fund is not sufficient, the buyer must make up the shortfall. Any surplus in the fund would be distributed in a second windfall. I would be interested to hear the views of the Minister of State on this proposal and I wish to make it clear that we will be seeking to amend the Bill, on foot of what I have just said, to allow for a court appointed inspector to clarify if the assets and liabilities of all building societies seeking to demutualise are in order.

The Bill has huge ramifications for building society members and our banking system. The plight of the victims of the Irish Nationwide will be totally ignored in the rush to pass this Bill and that is an insult. We have raised issues on this Bill and it is entirely wrong that we have been given such a short time to deal with it. Strangely, Irish Nationwide cleared the last hurdle to a fast-track sale last week when the Government pledged to revamp the building society rule book following intense pressure from its managing director. Even more strangely, this is then followed by the rushing of this Bill through both Houses, in the dying moments of this session.

I sincerely hope this lack of scrutiny does not come back to haunt us or, for the sake of the Minister of State, be added to the already considerable list of dubious deals associated with this Government.