Frances Fitzgerald (Fine Gael)

I welcome the opportunity to speak on the National Asset Management Agency Bill. It is an historic debate with significant implications for every man, woman and child in this country. No doubt it will have a huge impact on our children and our children's children. Whether they can stay in this country, are forced to emigrate or whether there will be jobs for them depends on getting this right. It is critical for the future of the economy.

I acknowledge the work done by the Minister for Finance, Deputy Brian Lenihan, on this legislation. I seek equal acknowledgement for the work of Fine Gael, Deputy Richard Bruton, Deputy Enda Kenny, the economics team and all Members on this side of the House who are taking this legislation extremely serious. It is vital that we examine it critically. We would not be doing our job if we did not do this effectively in the House today and on Committee Stage. We are not coming from the position of criticising the legislation simply for the sake of doing so. It deserves critical examination and we have key points to make which I hope the Minister will listen to and consider on Committee Stage.

We have concerns about the legislation in a range of areas. They focus on the business plan, its viability and how well grounded it is; the long-term economic value and governance issues. These are very important and must be seriously addressed. We have seen what a lack of governance and regulation has done in the banking sector. NAMA is a vehicle that will deal with billions of euro of taxpayers' money; therefore, we must ensure the governance issues are addressed comprehensively in the legislation. Fine Gael believes there is much room for improvement in the legislation in that regard. We will bring forward a number of amendments relating to governance.

We are concerned about liquidity issues. We are not convinced this vehicle will produce liquidity. Many other Senators and I received a letter from a man who has been making a great number of comments about NAMA, Mr. Peter Matthews. He makes the point that, given the situation in the Irish banks and the huge increase in the number of inter-bank loans they have received in recent months, their tendency will be to repay these loans as opposed to making the cash available to the businesses we have been discussing today. That is another matter of concern for us regarding NAMA.

Insider or golden circles inside NAMA are also a concern. It is up to the Minister to tell us why we need not be concerned about it. This has been a key issue in Irish economic and social life and we have no desire to have the same thing happen again. There must be mechanisms for transparency, proper reporting and objective information being made available on what is happening in the vehicle being established. A book I read recently, The Black Swan, is about how change, as opposed to certainty, is the essence of life. We sometimes operate on the assumption that life is about certainty and believe we can plan ahead. The thesis of this extremely well written book is that it is all about coping with uncertainty and change. Never was that more brilliantly illustrated than by what has happened in the economy and world markets in the past few years. The NAMA legislation and the structures it will establish will see many twists and turns in the years to come. I believe it will end up being quite a different operation from what is outlined in the legislation today.

My colleague, Senator Regan, has made the point that the European Commission has had a good deal to say about the information it has required from the Government in recent months and will require in the future. Perhaps the Minister will address this issue. The information the Commission seeks before it will be satisfied that everything is working well in NAMA is outlined clearly in the communication from the Commission on the treatment of impaired assets in the Community banking sector. There is much work to be done in providing information for the Commission and other international bodies. Unquestionably, the Government does not have carte blanche at this stage with regard to NAMA.

This legislation will place a huge burden on the shoulders of every man, woman and child in the country. These are people who rightly say they did not contribute to the banking crisis, but they are now being asked to take the risk for those who engaged in reckless and what often appeared to be unregulated banking. Mr. Peter Matthews refers to the banks in the communication he sent us today and says they need capital, integrity, competence and trust. When one considers the awe with which banks were viewed in past decades throughout Ireland, it is appalling to see the change that has occurred. All these qualities - trust, integrity and competence - are questioned in the banking sector. The ordinary person has lost faith in bankers and how they manage their affairs.

Legislation cannot be considered in a vacuum. Context is vital. One of the key issues with banking in recent years concerned huge speculation. That speculation was not grounded in any element of logic regarding land valuation. As a result of this speculation and recklessness, the country is two years into a financial crisis that has left Irish businesses and families struggling to gain access to often essential credit. We also see families trying to cope with unemployment and negative equity. These are the challenges.

Fine Gael's concerns about the legislation focus on three areas which some of my colleagues have outlined. We are deeply concerned about the huge private sector risk being transferred to the taxpayer. We are concerned about the lack of transparency and secrecy with which NAMA might well operate. There are various sections in the legislation where that is a particular concern. Section 56, for example, refers to when the Minister is given confidential information. Can he bring this into the public domain if it is deemed to be in the public interest? That is a key question. The Minister is given onerous powers and responsibilities in section 56, but what about the public interest and the disclosure of information, if it is deemed necessary, which it may well be in this context, given the amounts of money we are discussing? The third concern is one I have mentioned, liquidity issues and the lack of a guarantee that credit will go to businesses.

I am very concerned about the issue of long-term economic value and that the valuations will be far too high. I can offer the Minister an example that has been quoted a great deal but is worth quoting, the recent assessment of the Irish Glass Bottle site in Ringsend in Dublin. It is now valued at €60 million rather than the €412 million paid for it initially. That is a write-down of 85%. In fact, some argue that it is worth €25 million. There are certain conditions relating to this in terms of the contamination of the site and various other facts. However, the site exposes the starkness of the situation with regard to changing valuations. What is the impact of such write-downs of valuations on the NAMA business plan? What impact will such a write-down have on the future capital requirements of the banks? If rosy valuations continue, will the taxpayer end up having to bridge the growing gap between fantasy figure valuations and the reality of the banks' balance sheets? That is a key question. The lower the valuations, the less money the banks will have, in which case issues arise about their balance sheets.

The Minister has said we cannot do nothing. Obviously, nobody is suggesting we do nothing. Clearly, we must progress this issue and Fine Gael has made solid proposals.