John Gilroy (Labour)

I welcome the Minister of State. I have placed a moratorium on myself to prevent me from criticising Fianna Fáil for the time being but I will find it even more difficult to stick by that if I do not hear a less belligerent contribution from Senator Power. She has made one sensible comment, in that nobody has a monopoly on outrage or sympathy in regard to this issue. It is probably all the more acute in Ireland given the cultural attachment people have to property. It makes the problem more acute than in other countries.

Some people cannot pay their debts while others will not. It is important to recognise, as the Law Reform Commission has, that these may not be two distinct groups. There may be a dichotomy between both positions where people juggle their personal finances to offset one debt against another. Those who cannot pay their debts require and deserve the support of the State. It is strange that only yesterday the energy regulator announced that he would make provision to ensure energy suppliers could refuse to take on customers from another supplier who are carrying debts of more than €250. While I am not surprised by the decision, I am surprised that he felt it necessary to make such a decision. That surely indicates something happening in many households that might not be obvious. Heat, light and fuel are basic needs but people are clearly coming under significant pressure if the regulator has found it necessary to make such a statement.

The previous Administration faced paralysis in this regard and I accept the moratorium was in put in place but the current Administration also seems to be a little hesitant in this regard. The Minister of State explained that this is a complex issue, which I accept, and that there is a host of crises facing us but it is critical that we get down to business and sort this out once and for all. Nobody is saying this will be easy. A number of commentators oppose debt forgiveness or any form of relief, which has the whiff of moral hazard about it but the cold logic of moral hazard can equally be applied to debt forgiveness. There is confusion about the pressures of indebtedness and the issue of negative equity but they are separate issues.

The moratorium on repossessions and the involvement of MABS were a good start but they were only a start and it is simplistic to look on these initiatives as solutions. The balance sheets of the banks need to be examined because that is the crux of the problem. In our rush to protect them, we may have missed the social implications at play for a great number of people. Losses must be crystallised on the banks' balance sheets sooner rather than later because their denial of the problem and the failure to do this has led to a catastrophic loss of confidence in our economy. The sooner the losses are crystallised, the sooner we can move on. It will not be simple to do this but it will have to be done to restore confidence in the country. We need to face up to this reality before we can move on.

This will be unpleasant for the banks and the State and it will be unpopular among many sectors of society and the establishment. However, there are many different models; for example, Senator Hayden referred to the Scottish model. The American model of debt forgiveness and personal bankruptcy is interesting, given this is the home of capitalism and is reddest in tooth and claw. The US has a lenient system of personal debt forgiveness. The Mortgage Forgiveness Debt Relief Act 2007 and debt cancellation precludes income from being taken to discharge bankruptcy on the principal residence only.

However, there are many issues, to which there is no single or simple answer. A multitude of solutions will be needed. Reference was made to a shared equity scheme, with participation by the State or the banks or local authorities. Debt forgiveness has to be factored in but how that is structured will require a great deal of thought. I commend Senator Crown on his interesting contribution. As Senator Power said, we have gotten off to a good start in this debate because a cross-party approach to the issue is needed. There are no monopolies in this House. It would be good for the House if we were seen to work together and it would good for citizens who face this problem and for democracy.