Aideen Hayden (Labour) | Oireachtas source

I welcome the Minister to the House. Like a number of others, I would like to thank Senator Barrett for all the work he has put into this draft Bill. It is a superb piece of work. I am a lawyer. I also have a degree in economics. I have gone through this proposal on a number of occasions. If I sat down to go through it ten more times, I doubt that I would understand it completely. I can say honestly that I am pretty confident that I would not understand it.

Like other speakers, I would like the Government to give this Bill some serious consideration. I honestly believe we have reached a point in our history at which we need to examine new ways of doing things. I agree with those Senators who have said we need to deal with the difficulties in the housing market at present. I refer in particular to the manner in which the housing market relates to the current economy. Ms Fiona Muldoon has been mentioned in this House on a number of occasions in the last two days. Her comments at the Irish Banking Federation conference were particularly timely. When she described the dealings of the Central Bank and the regulator with the banking sector as being like dealing with a teenager, she said it all about the point we have reached in our interaction with the banking sector.

I would like to mention a couple of figures to demonstrate that the housing market is currently stuck. The CSO has indicated on a number of occasions that it believes the housing market has over-corrected. The most recent auction figures suggested that over 50% of properties being bought in the State at the moment are being bought for cash. That is not a healthy situation. It does not suggest that the mortgage market is functioning properly. We are all too well aware of the number of home owners who are in mortgage distress. Now that the Minister is in our midst, it is tempting to mention that Senators have asked for a fuller debate on the issue of mortgage arrears, with particular regard to what is happening under the mortgage arrears resolution process, which is meant to be presented to the Central Bank by the pillar banks.

I must admit I have a lot of time for Senator Barrett's proposal. However, there needs to be a note of caution with regard to a couple of points. History matters when it comes to a housing system. When one is talking about the Dutch housing system, for the sake of argument, it is important to bear in mind that one is looking at a process that is over 200 years old. Denmark belongs to the category of countries which come from a social democratic tradition. There is a much lower level of home ownership and a much higher level of social provision, particularly pension provision, in that country. That means people look to home ownership in a way that is completely different from the way people in Ireland look to it. Norway, to take another example, has deliberately encouraged very high levels of home ownership in order to establish a form of asset-based welfare. In other words, one's home is an asset on which one relies as one gets older. When we choose the models we will look at, we should be careful to select those that are most sympathetic to where we are coming from as a jurisdiction and that reflect our priorities and our past.

I would like to make a couple of points in response to Senator Barrett's analysis. He spoke about 80% loan-to-value ratios, for example. The Senator's Bill inspired me to study a couple of the treatises on the Irish housing market that have been published in recent years. I was struck by the 2004 report of the National Economic and Social Council, which basically said that the issue at that time was not one of affordability.

For most earners, the issue was access to a deposit. In other words, home ownership had never been less expensive than it was in 2004 but a significant number of people could not actually access the deposit.

It is easy to turn around and say what happened was a failure of banking regulation but that is not true. I would like to take the opportunity to refer Senator Barrett to one of his colleagues, Professor P. J. Drudy, and his work on the difficulty we had with not capturing betterment for the Irish people, for example, in terms of escalating land price values. It is very easy to look at what happened in the Irish housing system and look beyond the banking sector and the failure of regulation but let us not totally be myopic around the banking system. Let us look at the wider issues of why this system failed and collapsed. As an economist, Senator Barrett is particularly attached to the laws of supply and demand. The work of, for example, Mr. Peter Bacon and others shows that what happened in this housing market was not just about the failure of banking regulation but about the failure of supply and demand and, quite clearly, it was about the failure to provide an adequate amount of housing for people who needed it. I do not think we can ever get away from that when we move forward. If we think our problems are going to be solved by banking regulation and correcting banking misregulation without looking at the fundamental principles of supply and demand and the fact people need homes, we will never move on.

There is one issue we need to look to in the future. As I said, history matters. In the 1990s and leading into the market collapse in the 2000s, one of the fundamental matters in Ireland was the withdrawal of the Irish State from housing provision. The bottom line is that if one looks at Irish housing in the 1960s, 1970s and 1980s, we had a very similar banking sector over those three decades and, in fact, we did not really have financial liberalisation until the end of the 1970s and into the 1980s. The gap was filled by the role played by local authorities in lending to and providing homes for people on low incomes. My point is that if we are to look to the future, we must to some extent look to the past and what worked for this country in the past. Where we went wrong, if I may say so, and I am not sure if I have six or ten minutes remaining-----