Michael Noonan (Limerick City, Fine Gael)

We do not want a Greek tragedy every four or five years. We must make sure it does not happen again, and that is the governance issues. The six pack of measures for Governments was adopted at the Luxembourg ECOFIN. It will come through the Houses of the Oireachtas because we will have to legislate to put it in place but that is a very strong element of governance and it will have to continue.

The fifth item, and I put these on the agenda in Europe, is that we cannot live by austerity alone. There must be a European plan to make economies grow and the responsibility will have to be taken by the big, strong economies to make it grow. Greece will fall into place when all that is done.

There seems to be a change of mindset in Europe now. They seem to be addressing the recapitalisation and from remarks passed by the European director of the International Monetary Fund it appears they are looking at building the wall against contagion as well in some form. I hope a lot will happen in the coming weeks because if it does not, we are facing an unmitigated disaster. I certainly hope that does not happen.

The Senator spoke about the two pillar banks being too dominant and so on. In restructuring the banks all we can feasibly manage at the moment is two pillar banks but some competition will be provided by the overseas banks still operating in Ireland, and I hope that side would build up. There are issues of competition that can be validly raised and what used to be called the third banking force is very important but the combination of the foreign banks still trading here would fill that gap in the market. I hope the foreign banks do not withdraw from Ireland. I want to encourage overseas banks that have branches here to continue trading. They are very important. Senator D'Arcy said they have a different way of dealing with impaired mortgages than the pillar banks, which I was glad to hear.

The Senator spoke about the commitment in the programme for Government to additional tax relief for persons who took out mortgages between 2004 and 2008. Income tax would not be changed in mid-year. These are budgetary matters and they will be examined in the context of the budget.

The issue of what to do with people in difficulty with their mortgages has been the subject of a report within the Department of Finance.

We have that report and it will go to Government on Tuesday. I hope to publish it soon after that and have a full debate in both Houses of the Oireachtas. No party has property rights over the difficulties of mortgage holders. A set of ideas will come from the expert group but I will take on board any ideas Senator or TDs might bring forward because this is a pressing issue that must be addressed.

The figure of 55,000 mortgages in arrears is quoted by the Central Bank. This represents 45,000 people or families because some people have two mortgages. The figure of 55,000 is not quite accurate because there is a doubling up of mortgages. While 45,000 is a big number, it is manageable if we take the right initiatives and the proposals will be fully debated.

Senator D'Arcy had some good ideas and comments about Europe. I talked about the mortgage situation and I take his point on the black market. There are two parts to the black economy: those who are working and not paying tax and those who are working, not paying tax and drawing welfare. The second category is the more damaging. It is also true, however, and I am not trying to excuse people, that when we start to come out of a recession, initial activity is often in the black economy because people get three or four days work and do not sign off. After a while, when they get continuous work, especially in the building trade, they move out of the black economy and become legitimate taxpayers. The Revenue Commissioners are aware of this; I have had discussions with the Chairman of the Revenue Commissioners on this and they are watching it. It might be necessary to change the welfare rules as well so it is easier to move in and out of welfare payments if a person is getting intermittent casual work. I also agree with Senator D'Arcy on the importance of sport and culture. It is great for the image of Ireland and there is a strong economic aspect to it.

Senator Mary Ann O'Brien talked about charities and she is right. A group of officials from the Department, the Revenue Commissioners and the charities are examining these issues and we can ask the group to look at this VAT situation. A second group is dealing with philanthropy. We might be able to do something about this when the budget is being introduced.

Senator O'Donnell talked about NAMA. We could talk about NAMA and the various theories thereon all night. I am not sure NAMA was the correct solution but it was set up under law and the Bill went through both Houses of the Oireachtas. There is a great legal substructure holding it up now and part of that relates to confidentiality of their dealings and the fact the agency cannot be lobbied. The former Chairman of the Revenue Commissioners, Frank Daly, is the Chairman of NAMA and he is an open, decent man and a good public servant. He agreed when I discussed it with him to provide information to Senators and TDs and there is a specific email address and telephone number for public representatives and they are entitled to information. They are forbidden under law from lobbying but they are entitled to information, which is a way around much of the confidentiality restriction. If someone feels he has been wronged, he can get a read-out by getting a public representative to make a telephone call. He is legally protected because this has been officially agreed.

The business plan for dealing with developers, where they are given a sum of money to run their impaired business on behalf of NAMA, is controversial but the alternative is to place them into receivership and the fee for receivers is €180 per hour. When we start adding up all the hours that receivers would work, we can see the sense in having the developer who knows his own assets working for €100,000. Most of them are getting between €75,000 and €100,000, with two getting more than €100,000, one of whom is on €200,000 because he is looking after a huge portfolio of assets. A lot of things happened earlier where assets were transferred to spouses and money was sent abroad. Part of the deal in the negotiations was that an awful lot of this stuff has come back into the control of NAMA. It is a work in progress.

Also, NAMA is now starting to get stuff on to the market. The deal in London was a good one. Even though it had a loan book of €75 billion, it paid about €30 billion for it. When it sells, it tries to sell assets at a profit and will take as much as it can get. It is not trying to recover €30 billion; it is trying to recover everything. NAMA does not own property, it owns the loan books underpinning it. I would prefer if there was a more systematic way to get the Irish property market moving again. NAMA is such a big player that until it is in a position to get actively involved, there will not be much movement in the property market.

Upward only rent reviews make it hard for purchasers to price anything in Ireland. The Minister for Justice and Equality will be making an announcement on that shortly; legislation is in preparation in the Attorney General's office but once there is an announcement we will have some clarity. If someone comes from America to buy a shopping centre, if the law is changed to allow rent to go down as well as up, the value of the entire enterprise goes down. That would inhibit sales and must be clarified.

A senior international banker has spent the last ten days examining NAMA for me. I am to meet him tomorrow evening and he will advise me. He is over in the castle for other purposes with the diaspora but he has a great deal of experience with this so I will get a better read-out of it. I do not propose to change the legislation yet. In the last three months NAMA has moved more efficiently than was previously the case. The people who work for it are above reproach, they are good public servants who are working very hard. It is a colossal task.

Senator Mac Conghail asked about the pre-budget outlook and the expenditure review. That is all the Minister for Public Expenditure and Reform's area. Currently we are looking at how we get this material into the Houses to be discussed. It is a work in progress but the idea is to make the data available and to have debates on them. We are not quite sure of a timeframe for that but we do not intend to hold it like a bad hand of cards until budget day; the information will be released as we go along. We must make decisions on the capital side, then the current side and the taxation side. As we project forward from 2012 to 2015, there will be a lot of material. In the middle of that, the troika will be here for ten days and we must run ideas past them. We will move out commitments in the programme that we inherited and do not want.

For example, the €250 million per annum for income tax increases. While, as the Taoiseach has stated, the Government does not want to introduce income tax increases in the next budget, we will have to get the permission of the troika to have that provision removed. While I do not believe we will have any difficulty in that regard we will, as it is provided for in the programme, have to include tax measures of equal value in order to have it removed, which is what the troika will be interested in. The troika will not insist on income tax increases but will insist that the replacement adds up. We have gone through this before with the troika and do not believe we will have any particular difficulty in that regard.

Members may aware a new fiscal council has been established. The fiscal council will produce its first report some time in October. With the troika and fiscal council, we must get our ducks in a row before we can make available material which will allow for a real contribution from elected Members. I can assure Members that we will not hand it all down in one parcel on budget day. There will be information available prior to that but nothing has yet been arranged.

Senators also asked about multi-annual funding. The Minister, Deputy Howlin, is interested in moving towards multi-annual budgeting. That will be the next step after the expenditure review which is examining all programmes. This will ensure we do not have the annual bone fight of Departments with the Department of Finance about the small modules of expenditure which are either add-ons or cutbacks. It will be much better if we could budget for three years. The programme which we will be producing for 2012-2015 will contain elements of this.

Senator Gilroy made an interesting contribution on social investment. My officials have taken note of the points he made, which are important. We will take a look at it to see what scope is there. I thank Senator Barrett for his support. I have already dealt with the Government's problems. Moral hazard is one of the big issues. We must ensure we do not have a recurrence of what happened in the past. The Senator is correct that, by and large, it is the ordinary taxpayer who made no contribution to the decisions that got us into this difficulty that is paying the heaviest price. Many of those involved walked away free. Many other people have also paid prices, including people who had bank shares. They were completely wiped out. Many elderly people who were encouraged by their bank managers to buy shares because there was a bigger coupon on the dividend than if they left their money in a deposit account had their life savings wiped out. Anglo Irish Bank shares were completely wiped out, Allied Irish Banks shares are now only worth pennies and Bank of Ireland shares are down to 10 cent.

Senator O'Donnell referred to the good bargain that foreign investors got in Bank of Ireland. It was on the market for a long time and no one wanted to invest so I do not believe it was a great bargain. They paid ten cents for shares. At what they are being quoted today one could still make a profit, if the Senator is interested in a punt. The €3 billion plus put into Bank of Ireland by the previous Government is not all lost; some of it remains in the bank by way of preference shares. In the deal, we have maintained the preference share position. I believe approximately 10% off that is being paid to the Exchequer.

At some point, we will realise that investment and get the money back. In normal circumstances, as Bank of Ireland begins to trade profitably again, investor advice will be for it to buy the preference shares from the State because they are costing the bank too much in terms of the interest rate, which is higher than the market rate. An incentive is built in to encourage the new owners to rid themselves of the preference shares. I am hopeful we will get a good tranche of money back in the future. We will not recover it all. The money put in as straight capital is gone; it has been wiped out. However, the money put in as preference shares is recoverable. It is hoped as we move forward that we will get a return on the 15% we are holding as capital values increase. That was a policy decision. We could have sold the lot and left the State with nothing but we thought because of the money already invested that we should hold 15% of the bank so that as capital values increase we would begin to recover our money. We will see how that goes. Bank of Ireland is trading well at the moment and is attracting money on the wholesale market. It is doing well. We need to keep chasing Allied Irish Banks to ensure it keeps pace and provides an effective pillar bank.

While I have not answered all questions, that is all I wish to say that this point.