Ivana Bacik (Independent)

That this was allowed to happen indicates that there has been an appalling failure in regulation. It is clear that there are major questions to be answered with regard to how this came about. The Minister conceded that mistakes were made and that there was a massive over-reliance on construction and property.

Now that we are in this position, how do we move forward? I am glad Members on the Government benches have admitted that we may end up owning the banks. Why should we not move more quickly in that direction? Why should we not nationalise the banks now? Given that we are nationalising the risk through the establishment of NAMA, why should we not also seek to nationalise profit? Senator Norris made a good suggestion with regard to creating one national bank because this would confer on taxpayers a greater possibility of recouping a profit. That is the sort of radical and creative solution we should be considering.

I am grateful to a colleague in the financial sector who provided me with a copy of the World Bank's financial sector strategy and policy group's cross-country study on the use of asset management companies in the resolution of banking crises, which was published in the year 2000. This study, which reaches a number of interesting conclusions, indicates that asset management companies such as the proposed national asset management agency tend to be ineffective at corporate restructuring and are only good at disposing of assets when these are used to meet fairly narrow objectives in the presence of certain factors. Such factors include a defined timespan for the operation of asset management agencies. The most effective studied were located in Spain and the US and these had achieved their objectives where a small amount of bad debts was transferred from relatively small banks. In addition, the agencies in these countries were given a fixed timespan within which to operate. The World Bank identified some of the criteria necessary for the success of these agencies as professional management, political independence, adequate foreclosure and bankruptcy laws, appropriate funding, skilled resources and transparent operations and procedures. I am sure the Minister is aware of the World Bank studies on these structures.

Looking at the criteria which have been identified, I have a number of questions about NAMA which have not been answered and I would be grateful if the Minister would address them. The big question which everyone is asking is how much the agency will pay for the debts. Will it be as much as 85% of their book value, which would still saddle us with a whopping bill of €76 billion? What are the criteria for eligibility of the land and development loans which we are being asked to transfer? Will the number of individual developers to whom these loans have been made be disclosed? There have been disturbing media reports that only a very small number is involved. To whom will the shortfall levy be applied, assuming there is a shortfall as the Government envisages there may be? What is the position of Anglo Irish Bank? There are questions about this in the Government fact sheet on NAMA with which we were all supplied. No answers were supplied. What about the recruitment process for the CEO, chair and board of NAMA and for the new head of financial regulation? Looking at what the World Bank has suggested about asset management companies in banking crises, it is vital to have transparency in the operations and processes of these agencies, in order to inspire public confidence and confidence among international markets and investors. These are some of the questions that need to be answered. NAMA represents the elephant in the room of this budget. That is the focus of much of the comment.

I want to refer to the rest of the budget and to be critical as well as constructive. The budget was described, importantly, as a six-step five-year plan. All of us welcome as absolutely necessary the idea of a long-term plan. It is also important that it constitutes six steps. However, looking at the fine print, most of the detail relates to tax increases and cuts in public spending rather than to the equally important idea of stimulating the economy through job creation, the smart economy, building competitiveness and so on. Other speakers have mentioned many of the cuts proposed. I want to mention in particular the cut which I regard as the most mean minded, the cut in overseas development aid. An additional €100 million is to be cut, but it was mentioned in the small print and not in the Minister's speech on Tuesday. Dóchas and the other Irish aid agencies have rightly reacted very strongly, saying that the new aid cuts, coming on top of the three other cuts already imposed on the aid budget since last June, will have a devastating impact on the world's poorest people. The recent cut means that we have seen in the first four months of 2009 aid spending cut by 21.8% of the projected total for the year. Dóchas has said this will lead to the loss of lives in the developing world. This puts into perspective our own requirements on belt tightening. There will undoubtedly be hardships in Ireland. Although the Minister said he would not reduce welfare payments, he then proceeded to abolish the Christmas bonus, a particularly Scrooge-like gesture, cut rent supplement rates and halve the jobseeker's allowance for those under 20. Undoubtedly this will lead to greater hardship for those vulnerable groups.

There are two other groups whose predicament should, I believe, have been addressed in the budget. What about the provident people — not the profligate bankers whom we are bailing — in Bord na Móna or Waterford Glass who are seeing their pensions disappear, through no fault of their own? Surely there should be measures to protect pensions. Are there any such plans? Young people facing redundancy who have heavy mortgage commitments are another vulnerable group for whom this budget has provided no relief. We need to ensure their homes are protected, if we cannot protect their jobs.

I do not want to sound entirely negative. I recognise, as we all do, the need to make cutbacks. There are welcome measures in this budget. There are creative measures. I welcome the pre-school plan, which is long overdue. The cuts in pay and allowances to Oireachtas Members are very welcome. Some of us, including myself, have already taken a 10% voluntary pay cut. I did that last year. We need to lead on these issues. I also welcome the measures to reduce the public sector pay bill. The career break scheme for civil servants is excellent and should be extended throughout the public service. I am taking an unpaid career break from Trinity College next year. Trinity is one of the public sector employers which offers this incentive.