Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I also have to be fair. The financial institutions have responded to people's short-term debt crises. Forbearance arrangements have been in place in the past three or four years of the financial crisis and the collapse of property prices. We know from statistics and information made available, that approximately 80,000 arrangements have been entered into which involve debt forbearance. Where the financial institutions have been slow is in recognising that in certain circumstances debt forbearance is only kicking the can down the road and there is a need for debt forgiveness but that does not apply to everybody.

There are individuals who have the resources to meet their debts but, perhaps, they need an extended period in which to discharge them. However, we have to be conscious that while trying to do what is practical and of assistance to people in debt, we also need financial institutions which are sound and do not have to be further recapitalised, that are lending money to people who want to buy homes and making funds available for business purposes to SMEs and larger businesses to assist in the creation of jobs. There is a balance to be struck.

The financial institutions have engaged in a substantial debt forbearance. I said this in the other House and I have said so here already. There are many thousands of people who are in genuine financial difficulties, many through no fault of their own, many who bought properties, residential or investment, at the height of the boom, when the banks were throwing money at them like confetti at a wedding without undertaking due diligence that bore some reality to individual's financial circumstances. There are many people caught in those circumstances. For some of them, there is a need for the banks to engage in some level of debt forgiveness because there is no possibility of them meeting their capital obligations with respect of repayments way into the distant future, particularly given the collapse in property values. It is about a balance. It is good for a headline, although the Senator has not done this, to keep on kicking the financial institutions. We must remember the Irish people have paid to recapitalise them.

We need them to function correctly. We need individuals who can afford to discharge debt to do so and to recognise the numbers who have no capacity to do so and will in the distant future need debt forgiveness.

I appreciate that the Senator's proposal is well intended, but I do not wish to mislead him. The Government cannot produce a provision of this nature because it would be counterproductive. It would not assist in anything. What we hope will be of assistance is the new debt settlement architecture that will be put in place which will require the active engagement of debtors and creditors and we will keep under careful review to ensure there is active engagement. If it turns out that there is not and that it requires further amending legislation, I will not be slow to introduce it.