Joe O'Reilly (Fine Gael)

While I accept the Senator's analysis of the culpability of the banks, the lack of international regulation and the disgraceful sub-prime lending in America, we cannot exonerate our Government of responsibility for allowing the building boom to go out of control for the sake of collecting revenue and allowing waste to develop in the economy and elsewhere. I do not like taking issue with my good friend, Senator Hanafin, and he will take it in the proper spirit, but he has a future as a scriptwriter or fiction writer for the Minister of State. Perhaps he could be a modern economist with a new commission. Fair dues to him. This is all part of the cut and thrust of debate and is worthwhile because we must consider matters from every perspective.

I congratulate my colleague, Senator McFadden, on her presentation of this motion. She has much compassion and empathy for people and a real feel for politics at a local level. This motion was born out of that principle and that type of conviction. It is a very worthy motion and, tragically, a very relevant one. I congratulate her on her exposition of it and Senator Buttimer for seconding it.

Tragically, indebtedness is a huge problem which arises from, and is aggravated by, unemployment. The current unemployment figure is in excess of 400,000 people. In June 2008 the Financial Regulator estimated that 14,000 people had mortgages in arrears. It is now estimated the figure could be double that. Some 200,000 people have negative equity and that figure will increase.

I take Senator MacSharry's point that unfortunately there is a risk of interest rate increases. I also accept the modification made by Senator Hanafin that we may not return to the 1980s. Even if there was a marginal increase in interest rates, it would have a huge implication for people who have borrowed to the pin of their collar.

The 2009 code on mortgage arrears, or the existing code on how mortgage arrears should be dealt with, is reactive in the sense that it is a timetable for court, repossessions etc. It is not proactive in the sense of interfering to deal with the issue, engaging in conciliation, applying a moratorium on the debt in some instances, extending the duration of the mortgage or looking at interest rates or payment methods. It is not that kind of system and that should be addressed immediately.

The protocol between the Irish Banking Federation and the Money Advice and Budgeting Service while worthy is not set out in legislation and that is a difficulty. The problem with MABS is understaffing and the waiting list. It is argued that some of the personnel in MABS do not have the capacity, or are not sufficiently qualified in all instances, to negotiate fully with lending institutions.

I refer to the open court procedure. Thank God we have not all had the experience of attending court, although nobody can say with his or her hand on heart that he or she will not do so in the future, especially if the doomsday scenario of a doubling or trebling interest rates occurs. Those who have attended court know it is archaic and unlikely to get the right reaction. It is punitive, public and adversarial and does not provide a mechanism to deal with this issue. The imprisonment of debtors is hugely expensive and is not a practical option. Senator McFadden cited a court ruling earlier. An alternative is needed.

The legislation needs to be reviewed and a new proactive process must be put in place to try to resolve this difficulty almost like in marital and other disputes where a conciliation system applies which rectifies the difficulty. That would be better than a punitive approach or a cornering of the debtor. There will be dishonourable exceptions and where they exist, there is no option but to allow the law to take its course. It probably was the case at one stage in our history where only very dishonourable people who would not pay came before the court but that is not always the case now. We must adjust to the new reality.

Despite criticism of it from the other side, and that is the job of a debate in the House, our concept of a home owner support scheme, or our amendment to the NAMA legislation, is worthy. I commend that to the Government and ask the Minister of State, Deputy Curran, to take another look at it. I take the point we are attempting to save an economy but we take issue with the entire NAMA concept and propose an alternative. Saving the economy is central but the economy involves house owners and property. We have a society as well as an economy and both must be dealt with.

We propose that part of a property would be taken over after negotiating the debt with the relevant financial institution. A new price would be negotiated in light of changed circumstances. NAMA would negotiate if there was an endangered property and take equity, if required, and charge a rental fee for the equity. The debtor would then pay the remainder. That is what Fine Gael proposes. It could work in practice. The Government argues that NAMA can work for property developers in a macro sense so why could this not work for house owners in a micro sense?

If a debt on a house is €400,000 and there is a write-off of €80,000, the €320,000 would be divided between equity to NAMA and the remainder being paid off by the house owner. A rental would be paid to NAMA, almost like in the shared ownership scheme. That should work in practice and should be considered. MABS should also be extended.

This is a worthy debate and I look forward to the Minister of State's response. We should all work together and look at all practical solutions because we are dealing with considerable human misery which results in domestic violence, marital breakdown, substance abuse and suicide in some instances. It is beyond politics in the narrow sense.