Jim Walsh (Fianna Fail) | Oireachtas source

I welcome the Bill and commend the interest of Senator Barrett in this area. It grieves me that four years into probably the greatest financial disaster we have seen in our lifetime we are still trying to get to grips with some of the basic actions that need to be taken. That reflects badly on recent Administrations, and I am not excluding my party, and certainly includes the current Administration.

The idea behind the Bill, as Senator Barrett explained, is that the institution will be a bridge between investors on the one hand and borrowers on the other. Everybody in this House will recognise that we do not have a functioning banking system. Having recapitalised the banks, they are still not working, and I do not believe they will work. I recall somebody who was working within the banking architecture for many years saying to me at the time this crisis emerged that the banks, months before the issue arose, were sitting at high levels preparing their campaign and that they would dance rings around our Department of Finance and our Administration. Our Administration depends on people in the Department of Finance, the Central Bank and the regulator, all of whom failed, catastrophically in my opinion, to deal with the issues when they needed to be dealt with.

Many people have identified as a central failing during those good years that policies pursued were pro-cyclical, in other words, we had tax incentives and generated more investment into the property area. I was a critic of our tax regime at the time. I believe the commencement of this spiral began in the mid-1990s when the current Taoiseach, as Minister for Tourism and Trade, introduced the holiday home scheme. Over 1,000 houses were built in the Courtown area in my county and sold at a multiple of three times what houses in the rest of the county were selling for simply because of the tax breaks. Developers and investment structures made a killing, so to speak, because people were blinded by the tax deduction they got and, consequently, spent much more than they should have spent on the system.

I remember putting it to the Minister in 2001 that we needed to re-introduce a provision from the 1970s which required a certificate of reasonable value. If one was selling a house at that time one had to get from the Department a certificate of reasonable value. I argued strongly with the Minister. He tried with his officials but they convinced him that it would not work and that people would not go for it. He suggested that we introduce a provision whereby borrowing could not exceed the certificate but that was not done either.

The current Government is pursuing pro-cyclical policies which are depressing the market more than it should be depressed. The market needs to be stimulated. Some of the things we were doing in the good times should be brought back to try to get the market back to a realistic, sustainable level. It is not happening and I do not believe it will happen because I do not believe the advice or expertise is in place.

Everyone in the House knows that there are many young people who need to borrow to purchase their home. They are in a position to meet the repayments on the borrowings but the financial resources are not available in the banks. The banks are simply repairing their balance sheets. The Bill before the House would give an avenue of recourse to revenues for some of these people, although not all of them. It is a way for them to get access to moneys. It is a tried and trusted system in Denmark and elsewhere and it has worked well and successfully for many generations, as the Minister of State has acknowledged.

I note two points made by the Minister of State. He indicated he had no wish to introduce further risk in this area. I have tried to think about what risks there could be but I could only identify one. A securitised bond such as this one would attract the better or stronger borrowers and therefore remove them from the banks, which are dead banks and are not lending in any event. Many of the policies being pursued by this Government are trying to bolster a system that has failed and that is dead in the water. Something needs to be done.

I am a critic of the Personal Insolvency Bill which is still sitting in the Minister's office. Some four years into the crisis we have not addressed the antiquated bankruptcy laws in the country. As a consequence we have seen entrepreneurs and people who have lost everything they had having to emigrate to avail of more realistic bankruptcy provisions in other jurisdictions. In recent mornings on the Order of Business I have said that such people may resume their careers and business activities in those countries with a consequential loss of potential jobs in this country. We need to get expertise that will guide us in the right direction.

I commend Senator Barrett. He has taken a step in the right direction and this proposal should be supported. It is not a solution but it is part of the solution. I appeal to the other side to exercise their independence and leave this on the Order Paper by not voting it down. I imagine some of them realise that this needs to be done. If we vote it down we are going nowhere in respect of solving these issues.