Fiona O'Malley (Progressive Democrats)

This legislation is very important. As the Taoiseach said last week, this is where the Seanad can prove its worth and demonstrate it does not fall down in terms of partisan scrutiny of the legislation. So far, I am happy that contributors to the debate are interested in moving forward with the vehicle we now have, and to the best of our ability try to resolve the financial difficulties we face and the threat to the sovereignty of the country that the banking crisis has brought on us. This is where we are at and what we must deal with. Our purpose is to try to make the best of this scheme and of this Bill.

There are major faults with the Bill, one of which is the predication and measure of the growth of the economy on the growth of property prices. That is very regrettable because it is what got us into trouble in the first place. Our growth was based largely on the development of the property industry, property prices and development land prices. That is what led to the growth of this economy, and it was not sustainable. If we had taken that away, the economy would have been growing much more slowly but more sustainably. This Bill continues to use that measure of property price growth as a measure of economic growth. This is regrettable, because as Senator Donohoe pointed out, we should not be looking for a return to the situation in which we found ourselves. So many people have expressed a wish that we get back to those high prices. I remember being in debates over the past seven years when we were lamenting the growth in house prices, because it was a major problem to get people to own houses.

The banking of foolish greed allowed loans for development sites of over €400 million in central Dublin for a few acres. That is crazy when one thinks about it. The price of that land was transferred to the ordinary citizen through inflated house prices. That is regrettable and I am glad it is over.

I share Senator Ross's worry about what he calls the NAMA industry. It was very foolish to write into the Bill an advisory cost of €2.5 billion over the lifetime of NAMA. It is crazy to announce to people how much money will be spent on professional fees at the outset. We are facing a very difficult budget as we are looking to save €4 billion for next year, yet we are prepared to fork out €2.5 billion in professional fees and services over ten years to get this right. Many people are already earning a wage in the public sector who will have that level of advice. We might need a little bit more, but I agree with the Senator who said it was no wonder so many economists and estate agents are rushing to support NAMA. There is a vested interest and we need to caution against it. It is in this debate that we should highlight these issues. Many of these experts did not predict what was going to happen, so what are we buying? The Minister already indicated he would be looking for a reduction in professional fees in the budget, yet it is foolish to indicate we are prepared to pay up €2.5 billion in professional fees over the lifetime of NAMA.

Some of the other speakers have spoken about nationalisation. Senator Bacik spoke about this and made some parallels with the Iraq war. Just like the Iraq war, nationalisation is easy to get into, but very difficult to exit. Had we gone down the nationalisation route, there would have been many arguments about when it would be right to remove ourselves from the banking system. It is easy to get into it, but much more difficult to get out of it.

Senator Ross indicated this is more of a bailout for the bankers than for the developers. However, I argue it is really a bailout for the economy. We need to recognise that. The Labour Party took all the plaudits earlier for not supporting the State guarantee scheme last year. However, the decisions taken by that party have huge consequences. The fact that all other parties supported the State guarantee system meant we could continue to bank and exist as a sovereign State. What the Labour Party failed to recognise is what would have happened had we all taken its option. The country would doubtless have gone bankrupt. While the party members are applauding themselves for having taken their stand, they failed to recognise what might have happened. Thankfully, the banking system was saved, so we were able to continue as is, which is why we are faced with the issue that is NAMA.

NAMA is a balance between value for the assets and the risk to be taken. There has to be a question of overpaying for the assets. Senator White criticised this as a flaw with NAMA. However, it was critical to get the balance right between valuing the assets, which would allow the banks to recapitalise, and taking on the appropriate level of risk. That is why there must be a disparity. Were there not to be a premium paid on the assets, the banks could collapse anyway. We really need to look at how we can take on board everybody's concern. We need to remember this is taxpayers' money. It is not a case of the Government protecting the bankers. The Government is taking the taxpayers' money and applying it to shore up our economy and our banking system, because without that system, we cannot have a viable economy.

It is vitally important to encourage banks to lend to small and medium enterprises. We need to have money going through the veins of our system and the way to do that is by shoring up a proper banking organisation that will have the ability and strength to lend out to other risky organisations. At the end of the day, banks measure risk for industries and businesses that may have cash flow problems. It is vitally important that the banking system has enough confidence to bring cash flowing back into the veins of the economy. I hope it never goes back to the way it was when reckless financial greed was foolishly encouraged. The Government must take responsibility for the situation in which we ourselves today, but we rarely hear that the Opposition wanted the Government to go further because it had to oppose for its own sake. I listened to Fine Gael Members giving out about the Government for getting us to where we are today, but the Opposition should recall that it continued to fuel the same level of enthusiasm. It did not state, "It is time we called a halt to all of this."