Darragh O'Brien (Fianna Fail)

I welcome the Minister of State, Deputy Brian Hayes, back to the House. I know he enjoyed his time as a Senator but he is nearly becoming a permanent fixture here.

While Senator Aideen Hayden can tut all she likes, I assure her we will keep party politics out of this which is why we have not tabled an amendment to the motion. It is an important motion but a broad stroke on debt forgiveness can be a dangerous thing. As no costings have been associated with the motion's proposal, I am interested to hear the Minister of State's response. If debt write-downs are to be given to certain mortgage holders, particularly those who have them with the nationalised or practically nationalised banks, we will be looking at another write-down for the banks. To fill that hole, the Exchequer would have to seek further bank recapitalisation funds which will inevitably come from the taxpayer.

I would not dismiss the Cooney report on mortgage arrears out of hand as some Members have as some of its recommendations need to be examined. The bottom line is what the Government can afford to do. We need to be careful about flying kites on this issue although I am not suggesting that this motion is one.

There is a need to send out a message that we can move quickly to address a very difficult situation which is probably only going to get worse. In the next 12 months there will probably be four or five further increases in the ECB rate. There are those who are already struggling to meet their mortgage repayments. Thankfully, however, the majority of people remain in a position to do so. Whatever action it takes, the Government must ensure that those who are paying their mortgages will not be left to carry the can for those who are not.

The 12-month moratorium was a step forward. The mortgage interest supplement cost the State approximately €70 million. I am of the view that there is scope to increase that further, particularly when one considers that the figure for rent supplement is over €500 million. When people approach financial institutions or banks and outline the difficulties they are experiencing in terms of meeting their mortgage repayments, the banks are sending these individuals to the Department of Social Protection. The first port of call in such circumstances should be the banks, via the moratorium. It should not be the taxpayer, the Department of Social Protection or the HSE.

There is an immense amount of stress for people who cannot meet their mortgage repayments, especially those who find themselves in negative equity. That is why I welcome the motion. My constituency, Dublin North, has been the fastest growing area in the country during the past ten years. Many people have established their first homes there, either houses or apartments. Friends of mine are now literally stuck with one-bedroom apartments and they and their partners cannot start families. They have no way of getting out of the situation in which they find themselves. This gives rise not only to financial difficulties but also to social problems and it also causes great distress in areas.

We must consider the introduction of a mechanism in respect of this matter. This was covered to some degree in the context of the deferred interest aspect of the Cooney report. We must go further than what was suggested in the report, particularly in circumstances where people wish to trade up. Other jurisdictions have examined the possibility of also parking the negative equity portion. There will be no one-size-fits-all solution to this problem. I accept that those in the Labour Party appreciate that fact. I investigated the Scottish scheme when the motion was tabled and I am of the view that this scheme appears to have merit. However, the cost involved is crucial in the context of the amount the State can bear. If the State cannot bear it, then we must discover how much the banks can bear. In my view, the banks should be the first port of call.

There must be certainty in the market. I accept that these are bleak times but matters will approve in time. People need to know if property prices have hit bottom. Perhaps the Minister of State will indicate the position in that regard when he makes his contribution. Experts have different views on whether they have bottomed out. The Property Registration Authority of Ireland, PRAI, index of house prices was announced some months ago. It is extremely important that certainty be brought to the market and that an indication of the prices being achieved at sale be provided. Many experts state that there is value in the first-time buyers market.

Unless we come to grips with this matter soon, there could be another housing bubble in three to four years. A recent independent report carried out by an expert group indicated that there is only 18 months worth of housing stock remaining in the city and county of Dublin. Many young and older couples are stuck in apartments and cannot trade up to houses. When the banks return to a position of liquidity - this will happen in time and I hope it will be sooner rather than later - there will be a rush to purchase the houses to which I refer. How will we ensure that there will not be double-digit increases in house prices? How will we also ensure that people will not be obliged to chase after the game? Four years from now we could be dealing with a situation where this will be a serious problem in certain major urban centres. Building has stopped, and rightly so, but we must consider the position with regard to the type of existing housing stock that is in place.

On the moratorium and how it is being operated by the banks, unless the State can show that it can bear the burden of a debt forgiveness type of arrangement I would prefer if a deferral of interest scheme were introduced. The former type of arrangement would pose problems in the context of existing mortgage holders who are in a position to continue to pay their mortgages.

I wish to comment on the Housing Finance Agency, HFA, and the suggestion that, as with the Scottish scheme, the State might take an equity stake. As the Minister of State, Deputy Brian Hayes, is aware, the Minister of State at the Department of the Environment, Community and Local Government, Deputy Penrose, has effectively scrapped the construction of any new affordable housing. I have both anecdotal and real evidence that when people are seeking reductions in their mortgage repayments, the HFA is more difficult to deal with than many of the banks. Last month, it announced a 0.5% increase in its lending rate. There are those in affordable and shared-ownership housing schemes who are already struggling to meet their repayments. That is one aspect of the matter which is not specifically covered by the motion. That is fine but those to whom I refer are finding it extremely difficult to deal with the HFA and their local authorities. The banks are stuck with the 12-month moratorium and the attendant code of conduct and are obliged to try to assist mortgage holders by reducing their repayments, but that is not happening elsewhere.

I welcome the motion tabled by Senators Hayden and Moloney. It contains many good elements. What is the Government's view on the Cooney report? Is it the Labour Party's view that the report has been binned or is it the Government's opinion that there are aspects of the report which should be dealt with. I caution against blanket debt forgiveness. While the intentions behind such forgiveness are good, it might give rise to further difficulties in the future. In general terms my party welcomes the motion and takes it very seriously. In that context, a number of my colleagues intend to contribute to the debate on it. Will those on the Government side indicate, in the context of the timeframes involved, the steps that will be taken regarding the bringing forward of further initiatives in respect of stressed mortgages?