John Paul Phelan (Fine Gael)

I welcome the Minister, Deputy Brian Lenihan, to the House. I acknowledge the efforts he has made as Minister for Finance. In fairness, no one could claim that the situation we are in is due to any fault on his part. When appointed as Minister for Finance, he was landed with a poisoned chalice, which is an unenviable position. He has endeavoured to do his best during that period and, by and large, he has delivered, but I do not think NAMA could be considered part of that. We have had a lively discussion and most Senators have spoken on this very important legislation. I wish to refer to a few of the comments that have been made. I have been a Member of this House for seven years. In the last Seanad I was the Fine Gael spokesperson on finance. Senator Twomey holds that position now and he is doing a good job. I remember being in the House when the current Taoiseach was Minister for Finance.

Several Government Senators have said that nobody predicted the economic downturn or the collapse in the property market. In fact, however, many people predicted such a collapse. I recall addressing the former Minister for Finance after another budget in which he had increased public expenditure on the back of short-term tax revenues from an inflated property market, yet I was virtually laughed out of the place, as were other Opposition Senators. Many people pointed out then that the inflationary bubble in property could not continue. A lot of us may not have realised that the collapse would be so sharp and sudden, but we did predict it would happen. Most people on the Government side also knew it would happen at some stage, although they did not like to admit it. Actively or otherwise, the Government colluded to some extent because it benefited its interest to ensure the Revenue's coffers remained strong as the property market was going so well. Many economists, such as Jim Power and others, said it could not continue indefinitely, yet they were ignored. Political decisions were made and those of us who spoke out then were ignored.

I have witnessed seven or eight budgets in my time as a Senator, and on every occasion Deputy Richard Bruton said we could not continue building expenditure on the back of property taxes which would not continue indefinitely. His warnings were ignored and over the years he was accused of many things by Government spokespersons.

Senator O'Malley spoke about crazy banking practices and she is right. A large part of where we are today arises from such practices that emerged during the past ten years. There is very little, if anything, in this legislation that proposes to rectify the crazy banking practices we have seen over the past ten years. I do not believe that top bank executives will mend their ways. We are indebted to our colleague, Senator Ross, for his recent publication in this regard. Over the weekend we found that there was another bankers' federation dinner where the regulator was wined and dined by the country's leading bankers. A journalist from the Independent Newspapers group was not permitted access to what was discussed at that event. That does not engender in me any belief that the bankers will mend their ways. There is nothing in the Bill to suggest they will.

Senator O'Malley criticised the Labour Party's proposal. I have some difficulty with it but I think it is better than NAMA. She asked how we would get out of it were we to go the nationalisation route. We have gone down the route of nationalisation, however, and it is called Anglo Irish Bank. That is the one bank that should have been left to fold its tent. We have spent €4 billion recapitalising a bank that does not work and never will work properly. That €4 billion would go a long way towards solving the other difficulties in banks that have a hope of lending money and dealing with private individuals and businesses in future.

I am heartily sick of banks and bankers, not the clerks who put in hard work for an honest day's pay, but their leading executives. I am also heartily sick of the chant I hear from the Government side and elsewhere about there being no other show in town, apart from NAMA. There are several other shows in town. I met an auctioneer last week who said there was no other show in town. In addition, I heard several Government politicians who said the same thing, as well as a developer. All the bankers think there is no other show in town. Therefore, the people who started the fire and burnt the house down are now the firefighters. They are telling us we have to adopt the NAMA route, which immediately causes me to have grave concerns about the proposal we are discussing. A cosy relationship has existed for too long between the regulator, bankers, the Government and developers. Nothing in this legislation proposes to change that cosy relationship in any shape or form.

I refer specifically to four areas of the NAMA legislation and I hope the Minister will be able to enlighten me in his response. Senator Coffey mentioned most of them in his contribution. There is a danger in the valuation mechanism which is like walking a tightrope. If the properties are undervalued, it will have a detrimental effect on the banks. The whole purpose of NAMA would be defeated if the properties are undervalued, while if they are overvalued the taxpayer will be open to even greater exposure. In his reply, perhaps the Minister will enlighten us as to his thinking on that matter.

The notion of long-term economic value is one of the most puzzling things to have emerged in my ten years in politics. We cannot reliably predict where property values will be in ten years' time. The Government is engaging in a best guess situation, which is effectively a big gamble. I do not think this NAMA gamble is worth taking.

Several Government speakers mentioned the notion that NAMA will get credit flowing in the economy. I am glad Senator O'Toole, as someone who broadly supports the Bill and will be voting in favour of it, completely debunked the notion that this legislation will get credit flowing. There is nothing in NAMA that will get credit flowing. That was the one fundamental reason I was fully in favour of Deputy Richard Bruton's proposal for a good bank-bad bank policy because it was a clear mechanism of ensuring we would get money flowing in the economy. The objective of the Bill is to ensure we will get money and credit, which are effectively the lifeblood of any economy, moving again, yet there is nothing in the Bill that will guarantee that. I am glad an Independent Member like Senator O'Toole has pointed that out. Government speakers should read what he said.

The only criticism I have of the Minister's contribution is that he made an overly optimistic assessment of NAMA's profit. I cannot remember the figure he gave, but it was more than wildly optimistic. There is an absolute guarantee that the European Central Bank's lending rate will increase and it could increase substantially over the next couple of years. I do not believe the Government's projections for NAMA have correctly considered how that interest rate rise would affect NAMA's future viability.

I would like to hear the Minister's view on what the British Prime Minister, Gordon Brown, said over the weekend. I am not a big fan of his but I acknowledge he made a few interesting comments on the banking sector. He spoke about how the taxpayers of Europe and further afield are being asked to bail out banks. NAMA is essentially being established to bail out the banks. Other mechanisms around Europe are also bailing out financial institutions. Shareholders and bankers did very well out of the banking system for ten years and have creamed off profits and the taxpayer is being asked to carry the can. Mr. Brown suggested setting up a contingency fund. The Germans and the authorities in the United States have more or less rubbished his suggestions. I do not know how the contingency fund would work. What are the Minister's views on Mr. Brown's comments? If there is a future shock to our banking system such as the one we have witnessed over the past 18 months, could a system be put in place whereby the banks themselves could contribute to the recovery of the banking sector after the shock?

I do not always disagree with Senator Callely and I was particularly disappointed to hear him speak of the over-the-top nature of one of the Labour Party amendments, which proposed that NAMA report to the Oireachtas every 30 days. I do not necessarily agree with the timeframe but must acknowledge we are talking about a sum of €54 billion.

Senator Coffey spoke about our children and grandchildren having to pay. It is not just they who will be paying as we will be paying ourselves. We cannot be overly analytical in monitoring the expenditure of the €54 billion. As Senator Coffey suggested, it is in the national interest that we analyse it.

A criticism I have of the Government that goes to the nub of our economic circumstances is that it has no viable jobs strategy. The one way we can ensure we get out of our economic mess and save the thousands of people not covered by this Bill, namely, those who have paid extortionate amounts for houses and who are losing their jobs and cannot pay their mortgages, is by putting in place a jobs policy. There is a distinct lack of such a policy on the part of the Government. I feel for those affected.

I was on the verge of buying a house two years ago when my father passed away. The last good turn he did for me was making me feel I could not leave home on his passing away, thus saving me approximately €200,000. I would have bought a house otherwise and would now be in negative equity. I may be out of a job after the next Seanad election if some people are to be believed.

The people to whom I refer are those for whom I carry a candle. They have been completely left out of the Government's thought process and decisions regarding the objectives of NAMA.