Joe O'Reilly (Fine Gael)

I join Senator John Paul Phelan in welcoming the Minister to the House and acknowledging his input into the debate.

There are 423,000 people unemployed, many of whom are young graduates and many of whom have been displaced from employment in recent years. They feel this legislation is unfair. The feel it is unfair they are not being responded to by way of a new and radical job creation programme involving investment by the Government to stimulate the economy and obtain a tax yield from job creation. Such a job creation programme is not taking precedence over the supporting of risk takers who would have made enormous profits had their gamble succeeded, the supporting of our banks and those who lavished and swooned around in a property bubble and the justification of decades of incompetence. The unemployed, many of whom are very discerning and able and who are in their current circumstances through no fault of their own, believe this is a very unfair Bill.

There are 25,000 people at risk of having their houses repossessed or having difficulty making mortgage repayments. They feel it is unfair that their needs are not being prioritised. The Fine Gael amendment to this legislation, which would allow NAMA to take equity in their houses and afford them a means of getting over their difficulties, is not being accepted by the Government as a priority. In other words, the owner of a family home that is in jeopardy tonight looks upon himself as being cast adrift on the rough seas of economic difficulty while the investors, bankers, developers and everyone else get away scot free. The struggling home owners comprise the second category of people who believe what is occurring tonight is very unfair and that what is happening inside these walls is almost reminiscent of historical inequities and injustices.

In addition to the two groups who feel this legislation is unfair, there are many who are very sceptical. Many people outside these gates are sceptical about the valuation of the distressed assets that are to be transferred to NAMA. They are being valued at €47 billion. This assessment contrasts starkly with the assessment of the High Court in respect of Zoe Developments. Many of the assets in question are apartment complexes that have no value. All independent commentators say we now have enough houses for decades to come. What value will the apartments and unfinished housing estates have? What value has zoned land outside towns within which houses are not being sold? There is considerable scepticism over the valuation of properties at €47 billion.

Who can say what future values will be and what present values are? They are not tested in the marketplace as there is no marketplace. The experience of Japan is very instructive in this regard. It endured a long and difficult recession such as ours. As it comes out of recession, its property values have adjusted such that they are far below the values at the height of its boom. All evidence, be it anecdotal, from estate agents or from general observation, suggests that property values will not reach the projected levels. Many economic commentators agree and state the projected levels are mythical. The Japanese experience is very instructive in this regard. There lies the difficulty.

If there is scepticism about market values, there is great cynicism and scepticism over the fact that, in addition to making a payment of €47 billion, €7 billion will be added to the value of the distressed assets to account for perceived long-term economic value. That surely is a very notional concept. It is very vague and makes no practical sense. This is why Fine Gael proposed in the Dáil an amendment that would allow for risk sharing. Why should the bond holders, investors in the banks and people who trade in the marketplace of capitalism be immune from risk, thereby placing all the risk at the foot of the taxpayers?

A premise of the NAMA legislation, defended sincerely by the Minister, is that it will allow for credit to be made available to businesses. He is being naive in this respect because numerous commentators, including professors Honohan and McCarthy, have suggested the banks will concentrate on building up their capital reserves. The Minister is amending the legislation so he will be able to suggest a lending target to the banks. How will he know the banks are stating the facts and that there will be new lending? It is and will be the banks' policy not to lend. They will concentrate on building up capital reserves and will enter a phase of behaving cautiously.

The NAMA apparatus will not solve this difficultly. The Fine Gael proposition, namely, that a national recovery bank be set up and given equity of €2 billion to attract ECB or private investment, would at least ensure the existence of an independent lending body distinct from the existing banking apparatus. It could give moneys to normal retail banks to lend. This has an effectiveness about it.

I spoke of some people earlier, namely, the unemployed, house owners who are in trouble and small retailers who are under attack thanks to Northern shopping among other matters. The retailers need credit. If there is none, they are in serious trouble. While we may aspire to giving credit and while there may be a moral imperative on the banks to do so, there is no sign that they will. They have had a similar moral imperative to give credit since we guaranteed them months ago. As they have not responded to that, how do we know whether they will respond to future moral imperatives? They showed no morality during the property bubble when they gave unrealistic loans without proper securities. How do we know they have developed a new morality? How can we legislate for a morality? Surely pumping them up in this fashion is not the way to do it. The premise is wrong and naive. Some of us in the House have an idealism that is, at times, naive, but the banks will consolidate and hold on to the money given to them and will only opt for extraordinarily safe, gilt-edged lending which will not stimulate the economy. For this reason, the national recovery bank was the right mechanism. These are my difficulties with the legislation.

Our first response should be to the unemployed with a job stimulus package and supports for employment and job creation. Our second response should be to home owners in that we should assist in the way suggested by our amendment. We should respond to people who need credit, which means creating a vehicle by which credit can be assured, not something that is aspirational.

When this mechanism was established in France and elsewhere, it did not deal with distressed assets as well as the ordinary banking system did. It was clogged with bureaucracy and had a dimension of political influence. Our amendments address this matter and the Minister has a wish to prevent that situation, but our country has a culture of cronyism that suggests a high risk of NAMA being subjected to cronyism and lacking proper expertise. We cannot fly in the face of evidence and, to date, all evidence on NAMA-type bodies in other countries - while I have read about them, I would be reassured if the Minister produced alternative examples - suggests that such vehicles do not deal with loans as efficiently as ordinary banks in terms of collection, management and returns for the investor. We will lose out in terms of loan management and investment. In this sense, NAMA is a miscall. One could either state that it is, at worst, a cynical, sinister vehicle to protect those who mucked up the country or, at best, a naive mechanism that will not work in practice.

I am interested in the Minister's response on these issues. Will he take on board our suggestion about board members going through the Oireachtas vetting process? We need to know that board members are vetted in a transparent and public way and that this is seen to happen to reassure a cynical public. If we are to have the types of cuts projected for the budget in a month's time and, in parallel, a cloak and dagger operation that is putting taxpayer's money and the future at risk without Oireachtas vetting or the direct involvement of the Comptroller and Auditor General, we will add to a level of cynicism that could become dangerous. I appeal to the Minister to accept our amendments and to reconsider his amendment in respect of credit in the banks. The latter is aspirational and will not force the banks where we need to force them.