Aideen Hayden (Labour)

I thank the Minister of State for his considered comments on the debate. I would also like to thank our Senate colleagues for the dignified and thoughtful manner in which they have conducted this debate. It indicates all that is right about the Senate. All the debate about reform and about the Senate being a place where we can air ideas which will excite society can indicate that this House has something to offer Ireland and address the difficulties we face.

I would like to make a few points on the comments made by the Minister of State. The ESRI report written by David Duffy in 2009 indeed highlighted the issue of negative equity in the Irish housing market, but Mr. Duffy also highlighted that while people in negative equity continue to be able to repay their mortgages, there were serious negative impacts of negative equity, both on the market and on the lives of individuals. He pointed out that people in negative equity do not behave like homeowners and that they actually behave like renters. For example, they do not invest in their own homes.

It is also important to note that the figures from that report were in 2009, whereas we are now in 2011. The issue now is that the rate of default is going up significantly. That is the worrying trend we are facing. Of the 80,000 homeowners who have restructured, 40% of them are in arrears on these restructured mortgages. We are facing a slide into a greater problem.

The code of conduct is designed to secure repayment. Of course the banking sector is happy to secure ultimate repayment. The issue is that there is a significant cohort of people who will never be able to repay the loans they have taken out. That is ultimately the critical issue we are facing.

One of the points raised by several Senators, especially Senator O'Keeffe, is the number of sub-prime that preyed on Irish people during the boom years. From my own research into tenant purchase policy, I know that a significant number of social housing tenants who bought their homes under the tenant purchase scheme did so with Start Mortgages, GE Money, Woodchester and so on. If we examine the figures on repossessions in the courts, we discover that they are the lenders who are the cause of most of the repossessions in this country. What do we do about people who find themselves in a situation where they feel there is no way out? Part of the purpose behind this motion is not simply to talk about shared equity, but to talk about people who are in grossly untenable positions and how we can draw a line in the sand for them, so that they are not carrying this debt on to Never Never Land. In fact, if we examine the type of debt people are facing, we are looking at intergenerational debt.

I believe the Cooney report was flawed. It took an exceptionally conservative attitude and was not willing to explore some of the issues. Some of that was partly due to the composition of the commission.

We have put the Scottish model forward for consideration. We are not suggesting for a moment that it is the only answer. It is a potential answer. It proposes certain ways that we in Ireland could put forward some of these solutions. There is potential in the incremental purchase scheme, under the Housing (Miscellaneous Provisions) Act 2009, for a 40%-60% stake between the State and the homeowner.

We have put significant amounts of money into Irish banking system. Instead of pouring it in from the top, there is nothing to stop us from putting it in from the bottom up. In other words, we should use some of those funds to redeem some of the mortgage equity that is in the Irish system. It would have the benefit of allowing the banks to crystallise some of the debts on their books and to put liquidity into the system.

We are a nation of homeowners. It has been the policy of successive Governments, not just Fianna Fáil or Fine Gael but also the Labour Party, to encourage home ownership. Part of the encouragement of homeownership has been at the cost of social housing provision and at the cost of the rental sector. We created the monster where people will do anything to get into homeownership. It behoves all of us to find a solution for the people who find themselves in this position because of the society we have created.