Brendan Ryan (Labour)

While I am not sure I welcome the Bill, I am not prepared to fly in the face of reality. Senator O'Toole correctly spoke about mutuality, co-operation and so on. It is a pity that people insist on using incomplete criteria to judge the significant benefits of genuinely mutual organisations and the co-operative movement in general. My good friend, Senator Ross, stated that he did not know how the mutual organisations were better at delivering low interest rates. While I am sure he is right, the history of mutual organisations, that is, credit unions as originally envisaged, or credit unions is not one of maximising members' profits, but of providing services for members that would not be available elsewhere.

I am old enough to remember people's difficulties in getting mortgages. In many cases, issues remain to be discussed in that regard. It is a pity we do not have a thriving not-for-profit movement beyond credit unions. I am more than a little sceptical of some of the bleating of the banks on what they call unfair competition in respect of credit unions, as that is a bit rich. No members of the voluntary boards that operate credit unions will be paid as much in their lifetimes as the senior executives of some of the banks are paid per year. They do this work for the good of their communities. To have powerful banks using their considerable public and political clout to undermine credit unions is a great pity.

However, I do not weep for building societies too much. For members of such societies in the old days, the idea that they were mutual was as far from reality as one could get and still be on the planet. The building society with which I had my major mortgage was controlled by one family that managed to reorganise the rules so that the allegedly mutual owners never knew how much the family members were being paid. In Cork, they made it compulsory to use a firm of solicitors with direct family connections to the building society and insisted that we bought insurance through a system similarly linked to the extended family. That was supposed to be a mutual organisation owned by its members. One could find out less about the payments to its directors and senior executives than the payments to similar people in plcs, which were not mutual organisations at the time.

However benevolent the sole survivor is, the idea that building societies were mutual organisations was far from reality and there is no point in pretending otherwise. The largest society became an extraordinary vehicle for the enrichment of a small number of people who were essentially members of a single family. The society was not what it was meant to be.

I liked the Minister of State's reference to the dangers of predators, carpetbaggers and opportunists because I agree with him. That is exactly what happened to Eircom, namely, a bunch of predators, carpetbaggers and opportunists bought its shares when they were cheap and sold them at a considerable profit, thereby milking Eircom of funds that should have been used to give this country a proper broadband service. We are not short of such people.

When these transformations occur, whether they are the privatisation of Aer Lingus, Eircom or Greencore or demutualisations, the one aspect and certainty we are not supposed to mention is that the salaries of the CEOs will be doubled, trebled or quadrupled. To even suggest that the enthusiasm of the senior managers of these companies for whatever procedure is involved might have anything to do with their getting richer is regarded as untoward. Every privatisation has resulted in CEOs moving from the public service range of salaries, which would encompass the Taoiseach at one end and the rest of us down the line with a couple of exceptions, to a range wherein the Taoiseach would be regarded as a poorly paid middle-ranking executive in many of the companies in question.

My mind boggles at the salary of our second largest bank's chief executive. This afternoon, I worked out the figures. He is paid 2.5 times as much as Pat Kenny, six times as much as Joe Duffy, 15 times as much as the Taoiseach, 25 times as much as a Deputy, 35 times as much as a mere Senator and 160 times the average private sector wage. This is the ballpark salary that an executive of a soon-to-be demutualised building society will expect to emulate. He or she might only get half of it, that is, €1.25 million per year.

Senator Ross and I agree on a number of issues, one of which is that people justify many of these salaries by the need to keep high achievers in the Irish financial services sector. Otherwise, they will be snapped up by international headhunting organisations. Funnily, not a single executive has ever been snapped up. I do not want to personalise this issue in a debate on concepts, principles and the aggrandisement of the senior executives of these companies, but they are undoubtedly driven by the profit motive. They believe it is the way to provide the best service, but tell us that they are as pure as the driven snow and the last thing on their minds is money. One or the other of their statements is untrue.

I am sceptical of the Minister of State's assertion that there is no question of bowing to vested interests. It might be a good choice of phrase, but there is no doubt that we are providing the vehicle for the ambitions of a particular building society, perhaps more so for a particular individual. This measure might be correct and there might be a push from within the organisation for such to be done, but to pretend that the major driving force is not the desire of a building society to get out of the constraints governing what it can do for the next five years is to be more than innocent.

The Minister of State took the liberty to discuss the housing market, which I will also do shortly. I am unsure why turning a building society into a bank should be the business of the Minister of State with responsibility for housing rather than the Minister for Finance. In the interest of housing, perhaps the Minister of State will examine the extraordinary way in which banks that swore they were operating in a cut-throat competitive environment suddenly discovered they could afford to reduce their margins when the Bank of Scotland arrived. Why did this not previously happen? At the time of the euro changeover, why did it virtually take dawn raids conducted by the European Commission against our two major banks to persuade everyone that they did not need to make money due to no longer having currency risks? They were beaten by the EU into doing what was obvious to the rest of us.

In terms of housing, does the Minister of State consider the best way forward is to buy a house for €350,000, sell it in a year at 10% more and pay less tax on that €35,000 than an ordinary working person would pay having sweated for 40 hours per week to earn €35,000? Is that fair? It is happening.

People do not speculate in property for the rental income, which is just a convenient way of getting a tenant to pay an owner for the privilege of keeping their property secure while it inflates, giving the owner a capital gain on which he or she will pay tax at 20%. Will the Minister of State tell me if he thinks that is fair? We should not give the best rewards to people who speculate at zero risk but to people who work and who deserve them.