Paddy Burke (Fine Gael)

Much of the money invested in the National Pensions Reserve Fund came from the taxes paid by hard-pressed taxpayers who, after taking out large mortgages, paid stamp duty, VAT and so forth. The then Minister for Finance, Commissioner Charlie McCreevy, invested €1 billion in the fund, but the majority since has come from people who borrowed to buy expensive houses and apartments. Coupled with this, the wage inflation of recent years, low interest rates and a single currency have led to our boom and bust situation.

The Government will not put its hands up and admit to forgetting about the tourism industry, which is in a shambles. It has also forgotten about manufacturing. We have lost our glass-making, linen-making and other cottage industries and there is nothing to replace them. The budget has done nothing to rectify that situation.

Small businesses are dying daily, but the Government has done nothing in the budget to incentivise them, to promote job creation or to provide confidence. What confidence has the Government given to the business sector, including bars, restaurants, hairdressers, book shops and fashion shops? These people support local authorities through rates and water and refuse charges, but they are being socked left, right and centre. There is nothing for them.

Regarding the funding of local authorities, it has been brought to my attention that the Government recently announced grants to local authorities for the provision of roads and so forth. However, it sent them a circular to the effect that they should not spend the funding. It will now take back 30% of the proposed funding for local authorities. This will have a detrimental effect on local authorities and will lead to a reduction in the provision of road maintenance, public lighting, footpaths and sewerage and water facilities. It will badly affect all the services provided by local authorities and the Minister of State should confirm whether the funding and grants that were proposed to local authorities in recent weeks now have been cut by 30%. This constitutes more disaster. It upsets people when such measures are done covertly and without their knowledge. They cannot believe anyone, which is the reason that all politicians are branded as being the same. People believe they do not tell the truth and do not inform them as to what is happening.

I refer to the new national asset management company that is to be established. In his speech to this House, the Minister of State said:

The agency will have an independent commercial remit and will be expected to protect the taxpayers' investment. The Minister made it clear that all borrowers will be required to meet their full . . . obligations for repayment to the agency.

I have heard Government Members claim this does not constitute a bail out of banks. However, the Minister of State clearly stated that the obligations of the borrowers will be to the agency. This means that on the establishment of the agency and after its purchase of the bad debts from the banks, the latter then will be absolved from all aspects of such bad loans. Thereafter, they will be in the agency's hands and it will be responsible for pursuing those who borrowed in the first instance. What role will the banks then have? The Minister of State should explain to Members whether banks will have any role in this regard. They will receive 60% or 80% of the value of such debt on its purchase by the agency and thereafter they will be finished with it and will be out of the loop. I have been informed that some of the deals that were done are so complicated that they never will be untangled. The banks will hand over such deals to the agency, which will take them lock, stock and barrel and will attempt to untangle the legal webs that have been set up by various companies and experts over the past ten years. This matter should be explained to the public before the national asset management agency is put in place.

I refer to those who seek new mortgages. What criteria have been laid down by banks for those who wish to borrow? My bank, National Irish Bank, uses a measure of approximately 2.5 times an applicant's wages. However, as a great gap now has emerged between gross and net income, against what will an applicant be assessed? Will the criteria be based on gross or net income because they differ greatly? This will have an enormous effect on the price of property and if the criteria are based on net income, house prices will decline further.

I seek responses to my questions on local authorities, the reduction by 30% of grants and on asset management issues. My final question pertains to the numerous hard-pressed business people who in these difficult times are late in their payments of VAT, PAYE and PRSI. Will the penalties that have been imposed in recent years still be in place or will there be a form of reprieve for such people? I refer in particular to those who will make a genuine effort to make their payments, albeit one, two or three weeks late in some cases.