John Crown (Independent)

It is fair to say that in the past 20 years careful citizens who wished to make prudent provision for their own future and for that of their families generally followed the careful, conservative advice of serious financial advisers who told them they should invest in two things, namely, their family home and a recognised pension product. Others decided to follow more speculative, casino-like proposals, investing in international property, hotels or whatever, but careful, prudent people who did not wish to take a wild punt did those two things with any discretionary funds they had left after week-to-week expenses were looked after.

The thrust of a big chunk of Government policy appears to be to penalise people for making those two decisions. One of the penalties will be to impose different forms of taxes on the real estate asset people have. The second one is now to impose an involuntary, unplanned for tax on the moneys which are collected in their pension funds. I wish to suggest an alternative which not only makes greater moral sense but which would raise far more money. I urge the Minister to consider the suggestion and to bring it to the attention of his colleagues on the financial side of the Administration. Rather than imposing an involuntary raid on pension funds, why not look at people who are facing personal catastrophe, those who may lose their home, those with crushing weights of personal debt, not because they made wild investments but because they bought a house. They bought the same kind of house their fathers, mothers and grandparents bought only they had to pay more for it in the highly inflated real estate environment in which they found themselves. Contrary to the canard which is being propagated in Der Spiegel and other continental newspapers, it was not a case of wild Irish "Dodge City" dwellers taking the money from careful German hairdressers and investing it in Mercedes cars and foreign property. In general, it was people taking that money because they were advised to do it and buying a house.

The alternative suggestion relates to people who are facing crushing weights of personal debt because they made the prudent decision to buy a house, who at the same time have large amounts of money locked up in pension funds which they cannot access. It appears that approximately 1 million people in this country have private pension funds and the total amount of money held in those funds is about €85 billion. To quote US Senator Dirksen, "A billion here, a billion there and pretty soon you're talking real money." I do not say that everyone would make the decision to access 100% of the money they have locked in their pension fund but many people would make the decision to access some of the money if current pension law could be amended to allow for them to get premature access to the money. This is a win-win situation. It would enable people to reduce their level of personal debt, one which in the next few years could result in them not having the luxury of looking forward to their pension coming in but looking forward to being homeless if the bank forecloses or their house is confiscated in response to negative equity. If they could get that money and free up some component of their debt it would help their personal circumstances.

There is a tax liability and a tax benefit associated with making pension investments. Many people who would wish in this emergency to get that premature access would be happy to pay their tax and perhaps pay the tax with some kind of penalty in lieu of the early, premature maturation of the policy. That would give money to the Government which clearly needs it. Every billion raised would be a billion which would not have to be raised in bond markets or bailouts.

In terms of the general thrust of the Finance Bill, which is to improve employment prospects, it is generally recognised that one of the key limitations on employment creation in the country currently is the lack of liquidity which is being made available by banks to entrepreneurs and various other investors who may wish to start businesses.

I put it to the Minister that if people paid off a chunk of their mortgage with the money which was taken from their newly liberated pension funds that money could be designated at bank level for reinvestment in job creation schemes. Rather than incurring possible censure from people who feel they have no control over their pension fund being raided, in a situation that does not appear to be benefitting them particularly but is rather for the common good, something which we all support, this alternative would perhaps allow us to raise more money, make people see where the money was going and provide it to the three categories in society which need it most - the banks, and ultimately the people who will benefit from the loans they would get, the Government, which needs it for public services, and people who are in danger of losing their homes. As far as I am informed, the current estimate is that in excess of 90% of those funds are outside the State. That would be a massive repatriation of Irish wealth at a time when it is urgently needed.

We heard much talk in recent years of good banks and bad banks. Will the Minister consider the possibility of trying to think of some creative scheme that would incentivise some other component of the money which is held overseas to be reinvested in some new national repatriation bank? There are a number of ways of looking at the issue but it would probably require more time than we have in today's debate.

In response to Senator Byrne's earlier admonition that we should all see "The Hangover Part II", I ask if Members have been made aware of the interesting correspondence in The Irish Times this week which suggested that "The Hangover Part III" is going to be set in Two Mile Borris. I thank Members for their attention.