Paddy Burke (Fine Gael)

I welcome the Minister. When he comes to the House he gives us plenty of his time. That was the case when he came in September and he is doing so again on this occasion. It is right that he would do so because this is important legislation, probably the most important that has ever come before the Oireachtas.

I take issue with the Minister's very good friend, Senator Callely, who suggested the Bill is being held up. This is the first time the legislation has come before the House and it is only right that we would have a good debate. In all the financial matters that have come before the House in the past, every Minister for Finance has said, "This is what happened in 1997". The reason for this is that was the last time Fine Gael was in Government. It is important that we look back to see what has happened and why we are in the current position. Nobody has answered that question satisfactorily. Everyone has blamed everyone else but no one has taken any blame. When the Taoiseach was asked about it on "The Late Late Show" he said he apologised if he did something wrong. The former Taoiseach said that if he was still in office things would be better now than they are.

In his report, Mr. McCarthy has two graphs, one for expenditure and one for receipts. Our expenditure was getting out of control from 2003 onwards. That is the reality. The Department of Finance and the former Minister for Finance, now Taoiseach, did not spot that. They should have spotted it because all of the people in that Department are still there and, if they are not, they have been promoted. While in some of the years between 2004 and 2009 we made a small surplus, by and large, our spending was getting out of control. It went from €31.6 billion in 2004 to €55 billion this year. It was obvious that spending was getting way out of hand.

As we all know, the building boom was bringing in the money. We must consider what happened in that regard. In the 1980s the one thing that flourished was the black market. We cannot allow that to happen again. When the Minister is preparing the budget for next year I urge him to take that into consideration. High VAT rates were one of the reasons the black market flourished during the 1980s. To return to the housing boom, what happened is that the Government introduced section 23 relief. On 31 December 2004 the Minister's predecessor granted section 23 relief for anyone who had planning permission in place by 31 December 2004. As we know, planning permission lasts for five years. Therefore, many of the planning applications would have lasted up to 2009, but for some unknown reason some time after that the Minister for Finance announced that anyone who had not completed their projects by 31 December 2006 would not qualify for section 23 relief. That is what caused the bubble. It was a race to the finish. Every developer went to his or her bank manager to say the planning permission was in place for the project and he or she required credit to complete it. The projects that qualified for section 23 relief included houses in Longford and Westmeath or along the Shannon, hotels and car parks. That race to the finish caused the property bubble because it put enormous pressure on building work in those areas. That, in turn, put pressure on blocklayers, roofers and so forth in every other city in the country. It was a race to the finish. The developers did not mind whether they were sold, as long as they were built before 31 December 2006.

According to the McCarthy report, the downward trend started in 2003. The effect of closing section 23 was to increase the coffers and boost the building industry in order that the money could be brought in during 2006, just before the 2007 general election. That is what happened with the bubble. The Minister should examine this and ascertain whether the section 23 reliefs caused this race to the finish and created an enormous building boom that burst at an awful rate. It certainly was not just foreign financial problems that caused our financial problems.

A report in the Irish Independent of Saturday, 10 October showed where the Minister would encounter a problem. It dealt with rezoning throughout the country. Enough land has been rezoned to house 3 million people. If that amount of land is available for building, I cannot see how the Minister will get a 10% premium with NAMA. Wages in the private sector are decreasing, while they have already been reduced in the public sector and might decrease further. There will also be increases in taxation. Therefore, the amount of money people have available on which to borrow will not be sufficient to increase the price of property. A Department of Finance spokesman quoted in the report said NAMA would only take on loans it believed it could realise over ten years. He said that if there was that amount of land rezoned, it did not mean NAMA would take it on and that there was a discretionary part to the scheme. That means NAMA will not take on all loans. I assumed that all building land or loans over a value of €5 million would be taken on by NAMA but the Irish Independent report indicates that is not the case.

I have a number of further questions for the Minister. NAMA will be a legal minefield and the Bill's provisions will be a legal mess. They relate to legislation such as the Landlord and Tenant Acts. Many parts of the Bill will require legal opinions and lead to legal battles. It will be unworkable legislation in the long run.

There is also the issue of credit to small businesses. Small businesses are the lifeblood of this country, but consider how they have been treated in recent years and the strains imposed on them through increases in rates, water and sewerage charges and so forth. It is unsustainable. The small business sector must be examined. Small businesses must be given incentives to retain existing jobs and make the environment more competitive for them. However, as various speakers said, including Senator Cassidy, the credit flow to these businesses is drying up. The Minister has said credit will flow to small businesses, but take the example of a person who goes to a bank to seek an overdraft or a loan from the manager. The bank manager examines the person's business plan. The Minister, too, has a business plan, but it is about as useful as a business plan for a start-up business because what is in the plan has been made up by accountants, planners and so forth. The usual response of the bank manager is to look at the person and tell him or her that he or she will examine the plan. Nowadays, nine times out of ten the bank manager will not grant an increase or extension of an overdraft and, in some cases, will not give the person any money. How will the Minister compel them to take the risk? Every person who has bought a house or started a business took a risk and the bank manager took a risk with him or her. When I bought my first house, I scraped the few pounds together for the deposit. I believe I went to the credit union for it. That has happened in numerous cases. I do not know how the Minister will compel the banks to lend money, which is the kernel of the matter. The taxpayer is footing the bill and when the business person or the house purchaser approaches the bank for a loan, the Minister says he can compel it to lend that money. I certainly hope he can.

I do not fully understand the master SPV. There are many who do not understand it. As I understood him, the Minister said the SPV would buy from the banks and sell to NAMA. Is that the case? If it is, I have a different interpretation of it from most other people. That means it will sell to NAMA. Does that mean it must buy it back from NAMA? Can it sell to others aside from NAMA? Legality will also be an issue with regard to company law, as will the fact that the 49% shareholder will have more power under the legislation.

I am grateful for the opportunity to speak on the Bill. I will have further questions on Committee Stage.