Brian Hayes (Dublin South West, Fine Gael)

I can inform Senator Mulcahy that he will not be obliged to wait until the budget is introduced in order to discover what the Government proposes to do. It is the Government's intention - as set out by the Minister for Finance, Deputy Noonan - to put in place a full implementation strategy in advance of the budget. This will mean that no one will be obliged to wait until the first week of December in order to discover what are the Government's proposals. We will be proceeding to deal with this matter in the coming weeks. That is what the Minister for Finance said in the Lower House and I am in full agreement with him. It is the responsibility of Senator Mulcahy and the other Members of this House to ensure that we deliver on what we have proposed. That is what holding a Government to account involves. I have just provided the Senator with a bold statement and I reiterate that we are going to do what we have said.

The Government is going to proceed in the manner proposed because it has prioritised this issue in the context of the publication of the Keane report. Mr. Keane is outside of the Government and I understand that his services were provided free of charge, and on a pro bono basis, by the company - PricewaterhouseCoopers, PwC - by which he is employed. I do not intend to make a big song and dance in respect of this matter. However, I reiterate that Mr. Keane is employed in the private sector and that he was retained to carry out a job of work for the Government. Are we bound by his report? The answer is "No". We appreciate the work Mr. Keane has done and we intend to build on it in order to see what we can achieve by way of developing an implementation strategy.

The Keane report was presented to the economic management council of the Government. As Senators will be aware, the Taoiseach, the Tánaiste and Minister for Foreign Affairs and Trade and the Ministers for Finance and Public Expenditure and Reform, Deputies Noonan and Howlin, respectively, are the members of that council. The latter are the four members of the Cabinet who have huge responsibility in this area. Why is that? It is because they prioritised the issue. Having received both the Cooney and Keane reports, we want to proceed to deal with matters because now is the time for action.

The Government has been apprised of the position in respect of this matter and I assure Senators that we want to take action. The implementation strategy will be published in the weeks prior to the budget. There may well be issues in the budget which we will be obliged to address in the context of the country's fiscal position. However, it is the intention of the Government to publish the implementation strategy soon.

I am not been patronising when I state that the contributions of Members in both Houses and in the committees are important. We are not merely talking to ourselves. The relevant officials are, on a cross-departmental basis, having regard to the suggestions people are putting forward and are seeking to discover whether certain proposals, if adopted, could work and could make a difference in the fullness of time.

We need to publish the personal insolvency legislation - the heads of which are currently in development - as soon as possible. Without such legislation, we will not have a stick with which to beat the banks. One of the reasons nothing has happened in respect of this issue is because the banks are awaiting the legislation, which will transform the position with regard to personal insolvency. The current system whereby people can, from a financial point of view, be placed in cold storage for up to 12 years, is Victorian in nature and is completely out of kilter with the insolvency legislation that applies in other jurisdictions. In the absence of the legislation to which I refer, we will not have the incentive necessary to lure the banks to the table in order that the necessary deals can be made. The personal insolvency legislation is crucial and it will be introduced.

One of the first actions taken by the Minister for Finance, Deputy Noonan, on entering office was to totally transform his Department's banking unit. He brought in a person from the outside who has particular experience relating to the private sector and the operations of the Central Bank to run the unit. We have given a commitment to enter into immediate discussions with the banks in order to identify the aspects of the Keane report which could make a difference in the context of the immediate solution that is required. Those discussions are ongoing.

I do not believe that the Irish banking system possesses either the personnel or the capacity to deal with this matter at present. I recently met a very practical individual who was previously involved with bank restructuring in the UK banking market. After its collapse in the mid to late 1980s, the issue of negative equity in the south of England was addressed over a period of five years. The individual in question stated that solving the problem was not rocket science. It requires debt to be written down, the term of the debt to be extended and a change in mindset in the banks to ensure they have the capacity to address the problem. The personnel in our banks do not have the capacity to deal with the problem because they remain in denial and have been traumatised by the crash they caused. As I stated previously in the House, our bankers do not have the capacity to understand where the problems are in their communities. They need to understand banking all over again. Without a change of mindset in terms of personnel and expertise in the banks and without having in place codes such as the mortgage arrears resolution process, MARP, we will not make progress. If we are to address the issue, we require a complete change of attitude and mindset in the banking system, both in covered and non-covered institutions.

On the specific issues raised, the Leader of the Opposition, Senator Darragh O'Brien, made a sensible point that when the Opposition proposed good ideas, the Government should be minded to support them and work with the Opposition. That is a position I share and where the Government has not done so, we should have done so. We want to act on a cross-party basis to secure agreement on this issue. I concur with the Senator that we cannot wait until the budget. He will have heard remarks I made to colleagues on that issue.

Senator Fidelma Healy Eames also referred to the banks. She is correct that the losses have been provided for in recapitalisation. The response to the stress test published in March provided the banks with the capacity to move this matter on. The dilemma we face is that as one takes money from the system, it must be replaced with more money. We have placed great store on the two pillar banks in providing a functioning banking system. They have given us a commitment that, in the lifetime of the recapitalisation, at least €3 billion per annum will be invested in the economy, including through mortgage financing. We have an obligation to ensure they hit this target, sector by sector and quarter by quarter. Evidence has emerged, however, that it is not being met. This is a key issue and one the banking unit of the Department of Finance is constantly taking up with the banks. We will follow up on it.

Senator Katherine Zappone raised a fundamental issue, namely, the need to take a holistic approach to the issue of personal debt. The problem we face is not confined to mortgages but extends to credit cards, car loans and the totality of debt. A considerable amount of non-mortgage debt is relatively unguaranteed compared to mortgage debt. The Senator is correct that those who find themselves affected by the chronic mortgage debt crisis are the same group who have considerable debts hanging over their heads in a range of other loans. A middle agency needs to be established. The report is clear in this respect, but the Government, through the Department of Social Protection, the Department of Finance and a number of other Departments, has yet to work out what is the best option. We need an agency which will work out a plan for each individual. Some of the banks are relatively good at doing this, for example, Ulster Bank is employing companies to work out new restructured plans on a client by client basis. The question is how to establish such a mechanism on a statutory basis within a new agency. To be honest with the Senator, this must still be worked out. Throwing 100 advisers at the problem may not solve it.

If I contact my bank in an effort to restructure my mortgage and it produces what it perceives to be a solution, where do I go if, having provided the bank with all the relevant documentation, I disagree with the proposed solution, given that we do not have an appeals mechanism in place? Should I take the matter to the appeals board which is currently in a bank? We need an independent agency to perform this role.