Wednesday, 11 November 2009
National Asset Management Agency Bill 2009: Committee Stage (Resumed)
I welcome the Minister for Defence, Deputy O'Dea. We are dealing with Committee Stage (resumed) of the National Asset Management Agency Bill 2009. We are on section 208, amendment No. 61a in the names of Senators O'Toole and Ross. Senator O'Toole was in possession.
We are dealing with section 208(11). We had a lawyer speak in the House this morning who put words in my mouth as well as Fianna Fáil could ever do it. NAMA is a market-driven plan. The idea that someone might interpret it as a social democratic plan or form the view that something I said in support of NAMA was the same as my saying this is a social democracy-based plan, is anything but the case. This is market driven all the way.
If I suggested anywhere that it is social democratic, I will buy him dinner in the most expensive restaurant in Dublin and we will argue it further.
The Minister has a legal background so I invite him and Members of the House to listen with an open mind to what is in the provision: "The Minister shall not approve a restructuring plan or business plan that does not comply with the law of the State and of the European Communities...". We are passing a law which tells the Minister not to break the law. What are we doing? This is creating clover for lawyers, who will argue some day in a court about some other section of the legislation and that if in fact they meant the Minister not to break the law in the application of this aspect of NAMA, would they not have said it in the legislation given it is in this section of the legislation. This is tautology. As a legislator, I find it offensive. I assume social democratic, socialist, Christian democratic legislators and theocratic legislators, as there apparently are such legislators-----
-----would share my view. I urge the Minister to take a realistic and practical view on this. I will not push the amendment to a vote. This is about tidying up legislation, which is the business of the House.
Including this provision begs the question as to why it is there. Does it mean a Minister could approve a plan which did not comply with the law of the State or of the European Union? It is nonsensical to suggest that might happen. If a Minister did that, he would be in breach of the law. There is an implication here that a Minister might in some situations do things that would be in breach of the law but because he is a Minister and is implementing another piece of law, it will be okay. The provision is unnecessary. In all fairness, we know we must keep within the law. Otherwise, we must ask ourselves what we are doing here. To insert a provision to provide that Ministers, too, must obey the law of the land might have been necessary in the old communist regimes where Ministers had to look after each other and give each other special areas of consideration in working life, including special traffic lanes. In a modern democracy, however, we take it for granted that a Minister is as amenable to the law of the land as the rest of us and that legislators are no more above the law than anybody else.
I ask the Minister to accept the proposal and remove those lines from the Bill. It will do nothing to NAMA. In fact, removing the provision gives credibility and respectability to the legislation. There is no need for it. It implies that we are unsure of and lack trust in our Ministers and that we cannot allow them to do what they are elected to do. We are saying: "You must keep the law, Minister." Think about that. I appeal to the Minister to be sensible about this.
I listened carefully to Senator O'Toole and, as usual, he makes a great deal of sense. However, we are seeking EU approval for NAMA and, in doing so, it is important to make what is already implicit in the legislation absolutely explicit and state in clear and unambiguous language that we will not approve any restructuring plan that contravenes EU law. The amendment proposes to delete subsection (11) of section 208, which provides that the Minister for Finance, after consulting with the Governor of the Central Bank and the Financial Regulator, may direct a participating institution to draw up or amend within a specified period a restructuring plan for the purposes of the Act. The section also makes provision for related matters, including business plans. It is not clear why we would wish to propose the deletion of this subsection, although Senator O'Toole partly explained it, which provides that the Minister shall not approve a restructuring or business plan that fails to comply with domestic law and with European Communities law relating to competition and state aid.
People might consider the provision unnecessary. However, it is a very necessary provision as we must make it explicitly clear that we will respect EU requirements on state aid, in particular. Furthermore, the Seanad will be aware that we have been in close contact with the European authorities on every step of the process to date. The European authorities have already seen that this provision is included in the Bill. Its removal at this stage will serve no purpose other than to create difficulties or potential difficulties with the European Commission. For those reasons, I am reluctant to accept the amendment.
The last point might be the most telling. It suggests the provision is there to send a reassuring signal to the European Commission. Senator O'Toole is correct. It reads as something that should go without saying. How could it be otherwise? Senator O'Toole is not saying it should be removed so the Minister could approve a restructuring plan that did not comply with the law, and the Minister understands that. He is querying its inclusion and saying there should be a presumption that this would be the case. There is no need to spend long on this provision but I am curious about other legislation where such a provision is not included. Are we setting up different types of commitments that the State will make to comply with European legislation? In other words, if that provision is included, it means we really, really will comply with EU law but if it is not in the legislation, perhaps we might not. Of course, the Minister might have a problem accepting Senator O'Toole's amendment providing for its deletion because, having had his attention drawn to it, it might give rise to other problems if he removes it now.
I understand the Minister's point. It is a belt and braces measure because the chaps in Brussels are watching too much television and they know that nobody in Ireland obeys the law. We must ensure the Minister does. This confirms what Senator Regan has been saying over the last couple of days - I have been arguing against him but I have been incorrect - that we must shape up for Brussels and assure the European authorities we are doing this the right way. We can now point to the legislation and tell them that even if we wanted to break the law, we cannot. Incidentally, remember those words because my next amendment reflects precisely that view, although in a different context.
I will not press the amendment. I can understand that we are not trusted in Brussels and that we must be seen to be keeping the law and be able to point to it. I have no wish to lessen the strength of the Minister's hand when he goes there, but I will be amazed if Senator Regan does not have something to say. This confirms his worries all along that we still have to impress the Brussels crowd. The Minister is really feeding his paranoia on this issue.
Senator O'Toole does not like the negativity of this so perhaps the Minister should change the words to: "The Minister shall approve a restructuring plan or business plan that does comply with the laws of the State and the European Communities". That might satisfy the Senator and make the Minister more positive in his dealings with Europe.
One is always in favour of being in harmony with the laws of both the State and the European Union but it is a little fatuous to state the Government will not engage in criminal activity. What a relief for the Irish people. Is the Minister contemplating another section stating that he undertakes not to throw stones through the windows of the Seanad Chamber? It is really daft. I do not anticipate that it will do huge damage but it certainly will not make us appear terribly intelligent.
It is an interesting provision. We are discussing delegated legislation and it underscores the importance of compliance with EU state aid and competition law. We received confirmation from the Minister, Deputy Brian Lenihan, yesterday that all the valuation methods, the figure calculations and the assumptions must be verified by the European Commission and approved before this scheme proceeds. However, to remind this Government and its Ministers of their obligations to comply with the law is no bad thing.
Arising from the debate on Report Stage in the Dáil on the need for transparency in respect of guidelines issued with regard to lending practices of participating institutions, the Minister for Finance tabled this amendment to require that guidelines relating to lending practices that will be issued under this section would be laid before both Houses of the Oireachtas.
Amendment No. 63 and section 210 are very important. Everyone is glad that guidelines may be issued in respect of lending practices and procedures and that, under the amendment, these guidelines will be laid each House of the Oireachtas as soon as is practicable. I reiterate what I said on Second Stage and Committee Stage, namely, that guidelines may not be sufficient to ensure an adequate flow of credit to small businesses. The Minister for Finance accepted what I said in this regard and stated he would examine the idea of going further and perhaps facilitate the creation of a post similar to that of credit mediator in France. Senators on the Government benches supported this proposal. The French credit mediator, a position established by Christine Lagarde, that country's Minister for Economic Affairs, is in effect a sort of ombudsman who has the power to intervene where it appears that loans are not being made to viable businesses. In such circumstances, he or she can name and shame banks that are not lending. According to recent reports, the credit mediator has managed to facilitate the lending of money to approximately 10,000 businesses.
While I welcome the amendment, especially as it will strengthen the oversight and accountability aspect of the guidelines relating to lending practices and procedures, I ask that the Minister for Finance go further, either in section 210 or some other section, and provide for the appointment of a credit mediator who could intervene where lending practices are not facilitating the availability of credit. I am concerned that we should strengthen the principle that is already expressed in section 210. This principle will be augmented by the amendment but I am of the view that it could be strengthened further.
I welcome the Minister's statement to the effect that he would review this model, that he was not averse to it and that he recognised its merit. I accept it may not be appropriate to accommodate it in this section. However, this is the key section which deals with the overriding public interest - the need to ensure the availability of credit to borrowers, including small and medium enterprises - with which NAMA is really concerned.
I support the amendment. I also support the general concept of establishing a credit mediator. However, I do not know whether it will be possible to allow for the setting up of such an entity under this legislation. In the section, the term "may" rather than that of "shall" is used in respect of the Minister issuing guidelines. It is clear that an amendment will not be tabled in respect of replacing the former word with the latter. However, I hope the Minister will take some action in that regard.
We engaged in an interesting debate in respect of an earlier amendment in respect of how much power the Minister or the Government will have in the context of compelling institutions to lend money to small and medium enterprises and to extend credit to individuals. We have not yet seen the guidelines and, therefore, we do not know if they will work. I am of the view that they should be produced quite quickly.
The Minister of State will be aware that two years ago the criteria used by the banks in respect of applications for overdrafts made obtaining such overdrafts relatively easy. However, the banks have changed those criteria and are trying to bring to an end the overdraft facilities available to a huge number of businesses. I do not know if it will be possible to compel the banks to restore those criteria to the way they were two years ago when the market was more favourable.
Fine Gael put forward a proposal in this regard which would involve the establishment of a wholesale bank which could employ the criteria that were previously used and thereby facilitate lending to the type of companies to which I refer. I accept that there would be a greater risk involved but it would certainly facilitate the restoration of credit flows. What Fine Gael proposed would be much cheaper, the State would have control over it and everyone would know the number of loans involved and the value thereof because the wholesale bank would operate in a real-time market scenario rather than on the basis of the model relating to long-term economic value.
The Minister for Finance should either produce the guidelines or provide further information with regard to how they will be used to oblige banks to lend in a difficult economic environment. The banks are restricting overdraft and lending facilities to small and medium enterprises for two reasons. First, in difficult recessionary times, banks restrict their lending. The second reason is that because they overextended themselves and simply do not have the requisite money, the banks are trying to reduce the number of loans on their balance sheets. If we are going to compel the banks to lend, then we are going to require something more concrete.
The Minister should indicate what will be the content of the guidelines. If such information is not forthcoming, we should revert to Fine Gael's proposals to the effect that a wholesale good bank be established.
I welcome the Minister of State back to the House. I also welcome the amendment for all the reasons outlined by colleagues. We previously engaged in a debate on trying to amend the objectives and purposes of NAMA to include the provision of credit to small and medium-sized enterprises as one such objective. The Government did not accept the proposal that emanated from this side of the House in that regard.
Section 210 is welcome because it provides NAMA with the capacity and statutory ability to do what we all believe it should do, namely, facilitate the flow of credit. If, however, one compares the section with Part 8, which relates to the relationship between NAMA and participating institutions, one discovers a marked difference with regard to the relationships envisaged under both.
My point relates to the amendment. Section 130 states:
A participating institution that fails to comply with any obligation under this Act is liable to NAMA and any NAMA group entity concerned in damages in addition to any other consequence of the failure under this Act.
The section provides clear guidance with regard to what will be the relationship between NAMA and participating institutions, in this case the banks. However, that fact is neither laid down nor implied in section 210. What will happen if the banks decide to disregard the guidelines laid down in that section?
How will the guidelines be evaluated or monitored? Will the Minister of State provide additional details in that regard and indicate when the guidelines will be published? Banks and lending institutions ignored regulation and authority for many years and that is why we are experiencing our current difficulties. What can be done to ensure the guidelines will be effective? We were not allowed to include in the objectives and purposes of NAMA the key point that the agency's primary function should be the freeing up of credit flows. Fine Gael's amendment in that regard was rejected. It is suggested that guidelines which will have less of an impact than what was proposed by Fine Gael will assist us in dealing with these matters.
If the guidelines are not adhered to, what action can be taken? Who will be responsible for taking such action to ensure that what we all desire will come to pass? This goes to the heart of our earlier discussion regarding the role of the State in respect of banking and the level of direction that can be given. This matter also arises in the context of mortgage holders and those in negative equity. Are we shifting the balance at all in the context of intervention?
We are engaging in a major intervention to save the banks. Are we, however, placing any further obligation on them? Senator Harris referred on the Order of Business to the position in which people find themselves as a result of their debts. Are we taking action in that regard? Are we doing anything effective to address that issue by what we are doing with the guidelines? This is a key question. Will the Government consider whether there are other interim steps that could be taken? Senator Bacik suggested a credit mediator. Are there other innovations that could be brought into the legislation to deal more effectively with the issues it hopes to address, whether credit flow or mortgages? Are there other interim initiatives that could be taken that would be stronger than guidelines and might deal with the problems we seek to address?
I am speaking on the section and the amendment. There is a crucial issue in question here and there is a great need for clarity. Last night, when I said this could not work, it was interpreted as meaning I was opposed to it. I completely agree with the objectives of the points being made by Senator Fitzgerald. However, I am also saying - I will brook no contradiction on this - it cannot be implemented.
This is a free market economy. I do not like it, but that is the way it is. When I was looking for a mortgage for my house in 1971, the idea of going to a bank never crossed my mind. There was no such thing as bank mortgages; people went to a building society. In 1933, six men who could not get credit anywhere sat in the Teachers' Club in Dublin. They borrowed from each other and lived off the recognition of their IOUs. Eventually, they decided there was a better way to do things and they formed the Educational Building Society. That society is still the only real mutual society and financial institution of its type left in the country, although Irish Nationwide is still reluctantly in that category.
We need to be clear about this section. Senator White misunderstood me earlier. What I said about what Senator Fitzgerald was trying to achieve is that it is something that cannot be done under NAMA.
We have dealt with this issue previously since the foundation of the State. Emerging from that, I have given one example, namely, the mutual building societies, which were non-profit making, committed to their members and which had a soft, reasonable and humane approach to debt. Similarly, another member of my union established the Irish credit union movement, which similarly dealt with sub-prime lending in a controlled and regulated environment that maintained control of the liability. For example, each night going to the credit union meeting the manager would pass the shop of the man who had borrowed money to paint his shop-front. Then, if it had not been painted with the money that had been borrowed two weeks earlier, questions would be asked.
Similarly, in more recent times the State had two banks, the ACC and the ICC, which did exactly what Senator Fitzgerald was talking about. I have spoken here previously about the changes in all these areas. At some point during the past year the Leader has also bemoaned the loss of the ACC and the ICC. What happened when the boom took place was that every building society wanted to be a bank and every bank wanted to be a building society and it became impossible to distinguish between the different financial institutions. We have had this debate here.
I introduced a credit union Bill. I do not know how many years ago it was, but both I and Maurice Manning stood and argued when the building society legislation was going through. We resisted attempts by Government Members who had been put under pressure by a well-known figure in the building society movement to try to get the legislation on mutuality changed so that they could become public limited companies. Once a building society becomes a PLC, as all banks are, it cannot be controlled by Government, unless one is in a command economy. A command economy is communist or socialist and that is the point I was making.
This is a circle that cannot be squared in this context. However, and this is the point Senator Fitzgerald was making, while the Minister can issue all the guidelines he wants, he cannot make them stick. He can exert moral authority, but as Senator Harris asks, since when did banks respond to moral pressure, that is not how they operate.
Another crucial issue in this area is companies legislation, which requires limited companies to act in the interests of all their shareholders, which leaves them in breach of the law if they take action not in the best interest of increased shareholder value. Even if the Government owned a huge share of the banks, it would still be in breach of the law if it tried to make stick something that would give money where it would earn less than giving it elsewhere. The problem here is both a societal and economic structural problem and it will not be dealt with by NAMA.
The issue raised by Senator Fitzgerald is extraordinarily important. We should deal with it here and should look at the different instruments to do that. There are ways to do that within society, everything from tontine societies to mutual societies. There are all sorts of ways to deal with the issue. The State could encourage, support and develop this area. The way proposed in the Bill is not the way. It is a sop to the Opposition, but it cannot be made stick. It is a nice thing and people can say "Isn't it lovely?" However, if one goes to the courts or Bank of Ireland and flashes the guidelines, they will only laugh.
It is always refreshing and stimulating to listen to Senator O'Toole. It is a long time since I heard the word "tontine". The Dublin Tontine Society used to reside around the corner from me and from Senator O'Toole's distinguished union, whose history in this area I had not realised until now. It is very impressive.
Senator O'Toole's argument is very persuasive. Directors of banks would be in breach of their obligations to their investors if they acted in any other way than according to strict rules of capitalism. That is why I advocated full nationalisation of the banks. If the banks were nationalised, the Government could direct them to do whatever it wanted them to do. Is that correct?
One learns more and more. However, it could be done and would not be in conflict with the kind of principles we spoke about earlier. Regrettable though it may be, I think Senator O'Toole has won this argument intellectually, game, set and match. I would prefer to see the banks nationalised, but that is not going to happen and we must live with that.
Amendments Nos. 63 and 64 seem to me to be clearly related, yet they have not been grouped together. Why is that and why are we not discussing both together?
As it has been discussed, it would be completely wrong for me to revisit it, but since I am a very naughty boy, that is what I propose to do. Even though I do not agree with the amendment, I suggest it would be better if the wording was changed. It states: "Guidelines issued under this section shall be approved by the Oireachtas...". That is telling the Oireachtas it must approve them. What would happen if the guidelines were a complete load of rubbish? Could they be thrown out? The amendment should read: "Guidelines issued under this section must be approved by the Oireachtas commission on NAMA before issuance". In other words, they could not be issued until they were approved. The logic behind this amendment seems to be that the commission must approve everything. However, I suppose this is an academic point because the amendment is not going to get anywhere. However, as a retired academic, I like making these points.
I welcome the Minister for Defence to the House. The Government amendment is an excellent amendment. However, section 210(1) states, "The Minister may issue guidelines". I think this should use the word "shall" and I ask the Minister to consider that for Report Stage, because "shall" is more definite. We have had concerns about the word "may" previously and as Senator MacSharry has said, the Bill would be stronger if we used the word "shall", which is more definitive. The Government amendment inserting subsection (2) uses the phrase "shall cause a copy of guidelines" and does not use the word "may".
Senator O'Toole spoke about lending agencies and I would like to mention something of which he may not have been aware because he would not have been in the same position I was in 1971. I did not have access to a bank or building society for a loan and could only approach the local authority for a loan. My local authority was effective and well organised and gave loans to people with very little income, but got the money back. That is another side of the loan issue.
On the issue of the ACC and the ICC, I remember that in Newtowngore one time a former Fianna Fáil Minister intervened with the ACC bank to ensure a company was assisted in some way. There was, therefore, much direct political involvement in the ACC and the ICC, positive involvement as far as enterprise was concerned. There were excellent banks and it is a shame they were removed because they would be of great assistance now.
I do not know whether Anglo Irish Bank will be so compliant with Government directives or requests. There is a another section in the Bill on representations which we will go into further. However, there are other ways to raise money and most people in rural Ireland actually received their first loans from local authorities.
The very last thing of which I would accuse Senator O'Toole would be copping out of this discussion because he has been closely involved in it throughout. The consequence of what he is saying, however, risks a cop-out from the issue we are trying to address. I do not believe the argument he has made wins through in the end for the following reasons.
This discussion is raging all over the world and the extent to which governments can intervene in relation to financial institutions and seek to have their lending strategies focused on the productive part of the economy, is not peculiar to Ireland. I accept the first thing that must be addressed, regardless of whether the banks are in public or private ownership, is the capitalisation issue. I agree with Senator O'Toole that very little can happen unless the basic capital requirements are in place. It is the stated intention of the NAMA legislation to ensure this can be fixed and sorted out. For the purposes of what I am saying now I accept absolutely that this is the intention of the NAMA project.
However, I do not accept that when this is achieved, however it is to be done, that there is not a role for State intervention. It is not a question of the Minister determining whether Alex White or Joe O'Toole should get a loan. I am talking about something that is much more strategic and structural in terms of the configuration of lending and touching on the regulatory point made by Senator O'Toole. How should banks be required and expected to configure their lending in terms of the overall proportions of loans going to productive activity as opposed to what I described last night as the casino-type venture.? One of the Minister's colleagues last night thought I was referring to a casino, meaning a physical place where people go to play games, when in fact I was talking about the type of activity the banks have engaged in for so many years. I do not accept there cannot be a role for the State to intervene by directing the strategies of the banks and communicating to them not just a guideline but an expectation of promoting lending to the productive part of the economy. To that extent I do not agree with the fatalistic approach.
I understand where Senator O'Toole is coming from and it is an attractive argument on one level to say that the State cannot intervene and it has to be either one thing or the other. I probably agree more with what the Government is trying to achieve with section 210 to the effect that there must be a role for the State in this question. Otherwise this entire project could not conceivably be sold to the public or to future generations. I do not go along with that point at all, but I accept it is not so simple either in so far as it is being indicated that this can be done or directed overnight. To that extent I agree with Senator O'Toole, although I believe he carried the argument too far.
To pick up on the point made by Senators MacSharry and Leyden about the guidelines contemplated in 2010, I remind everybody that there may not be guidelines. When one reads the section one finds that the third word is "may", and that is the most important word in the section. If one does not get past "may", there are no guidelines. In other words, the Minister does not have to issue guidelines. Senators MacSharry and Leyden are absolutely right and the Minister should consider changing that on Report State. I hope I shall be permitted to table an amendment on Report Stage to replace "The Minister may issue guidelines" with "The Minister shall issue guidelines". I agree with the Minister's amendment absolutely to the effect that they should be laid before the Houses.
The question of direction is at the core of the legislation if it is to achieve what we hope it will as soon as possible. The contributions made so far are all very worthy. Mine would probably be somewhere between the contributions made by Senator O'Toole and Senator Alex White. Of the five financial institutions we shall have 100% direct ownership of two and substantial, close to dominant, ownership of the other three. In those circumstances, if maximum influence cannot be exerted, then we need to question our role as an organ of State in controlling the economy in any manner.
It is more important philosophically, I believe, to decide on the role of Government in taking over a commercial entity and in determining, for instance, the extent of such involvement. That is why guidelines are important. There is still some uncertainty in the Bill notwithstanding the acceptance of the amendment that the guidelines, when they come into being, will be laid before the Houses of the Oireachtas. There is the big question whether there will be guidelines in the first instance. I believe that guidelines are useful and necessary.
I agree with Senator Alex White that the guidelines should specify the areas rather than the amount of lending. We have had some experience in the recapitalisation legislation last year of setting up particular funds which to date have been very poorly accessed in terms of the two largest banks. A €100 million fund was established on foot of that legislation for green enterprise which was meant to be the centre point of the Government's Smart Economy document, yet there has been only a tiny drawdown on those funds to date. When we specify in legislation that particular types of lending should be made available, we need to ask why this is not being put into practice. We know the future of lending in the short-term for the financial institutions cannot and will not be in property. We have over-extended ourselves there and there must be new forms of lending to promote better and more sustainable economic activity. Much of the debate so far has focused on small and medium-sized enterprises. While we need to promote that type of business structure, it is more important that as a Legislature we are more directive about the type of economic activities we want to see rather than the vehicles we want to see them being promoted in.
That is where the vacuum exists at the moment. We are bringing in legislation to deal with the effect of an economy that was over-reliant on property and construction. We need economic activity that replaces that and which is more sustainable in the medium and long term. Rather than talking about the existence of credit and the vehicles through which it should be provided, there should be more discussion about the type of economic activities we would like to see. That is where the direction should be given to the financial institutions.
He is right, of course. I have described this as being comparable to a match where the State is the referee, only intervening when a professional foul is committed. It conjures up a scene where the referee is going to be stopping the game continually and instructing the players while the object of the capitalist exercise in game terms is to score as many goals as possible. The referee might start to decide how many goals should be scored or that first aid should be given to a worthy youth group visiting the match which would stop so that players can talk to such people. It is hard to say this and maintain any level of popularity in this society but the function of the State at the moment is to return the banks to their perceived norm as being red in tooth and claw. Banks that are functioning normally tend to give people money where they believe a return will be yielded on their investment and to withhold money from enterprises they believe will fold.
By and large, it is the least worst system in the world. There is no better one since we have tried command economies and they do not work. I agree with Senator Boyle, so what is to be done about maintaining State objectives? The answer as Senators Boyle and Alex White have suggested is to move into the higher regulatory areas of fiscal policy, not to direct specific credit policies but to introduce tax regimes that make it attractive to banks and investors to move into areas such as telecommunications to develop them and create employment. Direct interference is not a good idea.
One great advantage of this recession is that we have had a reality check throughout the system on the use of language, and on how banks and the economy function. The Irish are probably one of the best-educated peoples in the world on the functioning of the capitalist system. We are trying to get back to capitalist health and the State is doing its best to intervene where appropriate. We should not abuse language while doing so. It is ridiculous to give sops to people by saying that it will return the banks to normal, which is capitalist trading, and at the same time that it will keep on interfering with them. There must be other instruments and ways for the State to do that through taxation, fiscal policy or systems of regulation. Meanwhile, we should try to restrain our use of language and tell the truth when the people are in the mood to hear it.
Professor Stiglitz has been quoted again and again in the course of this debate as saying that what is being done here is criminal. Anybody who abuses language like that and uses the word "criminal" in that context cannot be trusted to use language or think straight in any other way.
When I spoke earlier I was speaking on the amendment but as this has now developed into a debate on the section I am not clear whether Senator Harris favours or opposes the section. He seems to express doubt about the working of section 210.
That explains everything.
In answer to Senator Harris, this envisages a system of regulation. A consensus is emerging across the House that the word "may" should be altered to "shall" and that the Minister must introduce these guidelines to regulate the participating institutions.
In response to Senator O'Toole's critique of the workability of the section, this applies only to participating institutions, credit institutions so designated under section 67 by the Minister. They have already been bought into a system that is different from the normal free market run which has failed us.
I am delighted to hear that. It is imperative that the Minister issues these guidelines. That is reflected in the word "shall" in the Minister's amendment and in the important subsection (2) that requires participating institutions to comply with the guidelines issued. It states "A participating institution shall comply with any guidelines issued under subsection (1)." We will table an amendment if the Government does not accept this one.
The Minister's willingness to consider my point about the credit mediator relates to his existing provision in section 210(1)(b) which describes the guidelines as relating not only to lending practices but also to the review of decisions of participating institutions to refuse credit facilities. The objective of the credit mediator model is to intervene where credit facilities have been refused and to ensure that they are granted where businesses are viable, and to name and shame where banks refuse to lend to viable businesses. That is the provision under which a credit mediator model might well be introduced.
I understand that but I am trying to explain to the Senator that section 2 sets out the raison d'être of the Act. Section 2(b)(i) states, "to facilitate the availability of credit in the economy of the State". That adequately covers what the Senator is trying to achieve.
Under section 210(1)(b) the guidelines will include a review of decisions about participating institutions to refuse credit facilities. The word "may" is the usual way this sort of thing is done. The Minister for Finance has reassured the Dáil that he intends to introduce guidelines. I reiterate that commitment here. There has been an interesting debate on what those guidelines should be or what they can achieve. The purpose of the legislation is not just to set guidelines or decide how much the Government can intervene here or there. The basic problem was to deal with lending institutions, on which we were depending to provide credit for the economy, whose balance sheets were effectively trashed.
In the first instance the legislation will restore liquidity to these institutions and repair their balance sheets by taking the bad loans off the balance sheets and allow them to focus on their real business, lending. As Senator Harris has said, the days are gone when the Irish banks' main activity is borrowing money cheaply on the wholesale credit markets and getting involved in all sorts of property scams and speculation. The banks will return to their core business, lending, which will increase shareholder value in the interest of the institutions. They will lend to get a return that will exceed what it costs to give the money. That is what the banks must get back to doing and the legislation enables them to do so.
The Government cannot tell a bank that it must lend to certain people even though it is obvious they cannot repay the loans.
The purpose of the legislation is to put the banks in a certain position and we do not want to do something now that will reverse that. We can, as Senator Alex White says, provide that certain sectors of the economy must receive a certain percentage. We do not have to reinvent the wheel to do that because there is a precedent for it in the initial deal with the banks on recapitalisation. The Minister is holding discussions with the banks. They know that the legislation exists to enable the Minister to introduce guidelines, which he has said he will do.
In response to Senator Bacik, what has been done in France is very interesting but I would guess that will not happen under these guidelines although it may. It is possible that under subsection (1)(b) something similar would be set up here. The Government has not gone through all the hassle, pressure and torture of coming up with the idea of NAMA, getting it off the ground and working out its exact details in order to arrive at a situation this time next year where credit is not flowing to the economy. If the guidelines and the legislation are not working, the Government will have to take action to deal with it. The Seanad can rest assured that it will.
It seems as if we are just going to have to wait for the guidelines.
The purpose of NAMA is to sort out the banks. However, the scale of the problem must be examined from the people's view. Loans in this country total approximately €390 billion, many of which were backed by interbank loans made by Irish banks with their international counterparts. The feeling is that when the Government gives the €54 billion worth of bonds to the Irish banks, they will exchange them for cash from the European Central Bank. In turn, they will replace their interbank loans with these ECB loans to tidy up their balance sheets.
Some argue we should leave the banks on their own as this is a free market. The market dictates what happens. However, this is not a normal recession. In such a recession, banks change their lending criteria, restrict lending and reduce their exposure to bad debts. However, the added factor in the Irish banking problem is that the banks do not have access to cash, meaning there are greater restrictions than there were in past recessions.
The banks are not just evaluating the risks of the businesses they are dealing with but actually reducing their exposure to any type of lending, both good or bad. I know, and I am sure the Minister does too, of good businesses with full order books but the banks are trying to reduce their overdraft facilities. This factor is not typical of the free market. The Irish banks simply have no access to cash.
The Government hopes that pouring €54 billion into the banking sector will solve this problem, allowing the banks to go back to how they work in a recession, simply evaluating risk, and ensuring credit flows. If that does not work, however, some pressure will have to be put on the banks to lend. This could be through the guidelines in question or Fine Gael's option of a good bank. The latter would be a wholesale bank that would simply back new loans while the banks would be left to deal with their old loans. It would allow new money into the economy to let businesses work.
The Government may end up having to back this Fine Gael proposal because next year it will have to pour between €10 billion and €15 billion into the banks to recapitalise them. That is after paying €54 billion for these toxic loans. When the Government is discussing the guidelines with the Oireachtas, it should not blind itself to the good bank concept just because it came from Fine Gael. If the banks are keeping their lending criteria strict and running the risk of putting good businesses out of work, the Fine Gael option may need to be taken.
If Senator O'Toole is correct that the NAMA model is wrong, we must take account of where we stand. We are having this debate in the context of a €54 billion investment in the banks' balance sheets and a State guarantee potentially worth €410 billion. We are beginning to accept there is no ability to direct the banks to put credit into the economy, which is after all the main objective of this legislation. This must give us pause for thought about the design and role of NAMA.
There are two different aspects to this debate. First, as the Minister said we are looking at cleaning up the banks' balance sheets and ensuring that credit flows again. The second aspect is how we achieve this. Section 210 states the Minister may issue guidelines to the banks but we are not sure how they will respond to this. The question again arises as to whether the NAMA vehicle is the solution. This is somewhat like last night's debate about long-term economic value.
The flow of credit is one of the two foundations upon which the whole NAMA model rests. After all the investment made by the taxpayer, the Minister may issue guidelines to the banks on lending but we are not sure they will be implemented. The Minister is correct that next year if credit is not flowing, then NAMA will have to be revisited and alternative models examined. That is not acceptable. Up to €54 billion is involved in NAMA and €410 billion in the State guarantee but the Minister may issue guidelines for credit.
My ideological journey to all this was probably much shorter than it was for those who started off with Marxism and socialism. Like all young men, I was once attracted to and dabbled in socialism, as well as young women, for quite a while. After all the investment made, the legislation's objective is not to clean up the banks' balance sheets but to get credit flowing again. The use of word "may" in this section means that we have to have a relentless dissatisfaction with how credit flow is working and be open at all times to considering new ways of doing it.
We are reassured the Minister intends to issue guidelines on credit flow. In that case there is no reason why "may" cannot be changed to "shall". It would secure the Minister's contention. As Senator Donohoe and others said, it would underline the seriousness of this section and the core purpose of this enormous risk-taking mechanism - that credit needs to be made available.
I am glad the Minister is open to the French credit mediator model. On Second Stage, he said an independent appeal mechanism is planned where credit is refused by a bank. It is precisely because the banks cannot be directed to lend to a particular individual that some form of independent mechanism is necessary. In France, the credit mediator was introduced to ensure a business, which believed it was wrongly refused credit, has a form of mediation and appeal. The sanctions and mediation process in France which we could adopt here is that banks which wrongly refuse to lend to viable businesses are named and shamed. It is a constructive suggestion from this side of the House to ensure the key purpose of NAMA is achieved.
I ask the Minister to strengthen the wording by substituting "may" with "shall" in section 210(1) and also to strengthen the vague idea in paragraph (b) of that subsection which states the guidelines shall relate "to the review of decisions of participating institutions to refuse credit facilities". We need to see something a little stronger to ensure there will be an independent mechanism to which people can go when they are wrongly refused credit.
I support Senator Bacik's desire to see the framing of the Bill made stronger, but it seems from this discussion that we need to see the guidelines to assess whether they will address some of the issues raised in the debate. For example, Senator Boyle spoke about strategies to direct investment or fiscal policy in particular areas, while Senator Harris wondered whether it was higher areas of fiscal policy that needed to address this issue. We need answers to these questions. Within the NAMA structure will we be able to deal with the issues of those in negative equity who are experiencing major difficulties with their repayments? I am not suggesting we direct banks in the minutiae of their lending, but I am questioning whether a direction can be given, influence can be exerted and policies developed in dealing with this problem facing thousands of people throughout the country. If we are not able to impact on lending policies or have mechanisms put in place to help them via the guidelines in NAMA, let us be honest about it and identify where the Government needs to develop fiscal policy, bring forward further regulation and go for the credit mediator. This has not been done in the debate on NAMA. What will be the impact of the guidelines? Do we need to move somewhere else outside NAMA to address these issues? These are critical questions.
Amendment No. 63 states the Minister "shall cause a copy of guidelines issued under subsection (1) to be laid before each House of the Oireachtas as soon as practicable". I hope that will be done very soon because today the banks are down a further 9%, which marks a further collapse. This is desperately serious and we need to act with the greatest possible speed.
On a technical drafting matter, it is obvious that the Minister should accept the change from the word "may" to "shall", but I would like to have the power to say he must accept that change. Otherwise, his own amendment is a nonsense because he includes the word "shall" in the amendment. He cannot force himself to issue a copy of something; therefore, he must include the word "shall". This is a partisan but partly a grammatical point. The world will not fall apart if he does this and it would have the added advantage of making him look intelligent.
This is a very important debate. Section 210 forms the core of the Bill. Very significant contributions have been made and there is a solution. The Government has not examined the Fine Gael good bank proposal, even though it should have done so, but it was cast aside because it was a proposal made from elsewhere. Section 210 is all about risk and risk takers. If a bank loans money, it has to take a risk. The person looking for the money is also taking a risk.
Senator O'Toole said this section was a sop to the taxpayer; that is one interpretation of it.
Yes, it is the core of the Bill. If money does not start flowing to businesses, there will be no money to meet the €54 billion that the Bill is all about. If NAMA makes a loss, the Minister has said there will be a surcharge on the banks. We could alter the section to state the surcharge would be lower on those banks willing to lend to those who put a business plan in place and take risks.
I welcome the fact that light is being thrown on the realities of the banks during this debate. It is good that we are now facing the fact that NAMA is more of a process than a product. It is tedious and nit-picking - I have always personally disliked it - when people like Senator Regan ask whether we are going to make a profit. I do not know how we could pin anything like that down in the case of any human enterprise. The Minister is entitled to say we hope and intend to make a profit, that we have made the calculations as well as human beings can do but that we are still at the mercy of history, time and circumstance. I do not understand such platonic thinking; I just do not get it. This is a process, not a product. It is a process in history and the Minister is doing the best he can. We should be more concerned about the readiness of Ministers to admit that this is contingent and that they can make mistakes. I am glad the Minister has said the Government will review the position continually. Senator Donohoe has emphasised the need to review continually, re-examine and reopen and adopt new methods.
I am not a lawyer and might need assistance from Senators Regan and White or anybody else on the following query. Enormous expertise will be built from the Bill in the assessment of loans and creditworthiness. We will need to access that expertise at some stage if we are to deal with the mountain of personal debt and negative equity problems, as Senator Fitzgerald pointed. I cannot see how we will get away from a position where a State agency will have to be set up to assess the situation of some 300,000 people in negative equity and solve their difficulties. Otherwise, the State will not be able to function as a society.
To do this, we need access to NAMA. I trust the Minister and his officials will be able to confirm that there is nothing in the Bill to prevent NAMA from making its expertise available to any such State agencies or in any assessment of personal mortgages. I suspect that in the coming five to six years up to 300,000 people will need to have their mortgages reassessed by a neutral agency and then have some policy to sort out the matter. We cannot make banks do this, as it would be another bailout. Let us think of the ethical consequences of asking people who made provident decisions when buying a house to carry those who made improvident decisions in the past few years. Let us think of the ethical and financial morass, in which the one guiding light will be the staff of NAMA. They are the only people with the expertise to make those hard decisions, as well as the compassionate ones.
I agree with the views of Senator Harris, and other speakers, on this section. On Monday night the Minister stated clearly that we could not put the mortgage section - people who have mortgages - into NAMA because it was structured to ensure that taxpayers' money is protected as much as possible in this legislation. We will go after developers, builders and whoever else owes money to the banks to ensure that the taxpayer will not suffer and therefore special legislation will have to be introduced. I covered that issue on the first day I spoke in the debate. The special legislation could provide for a moratorium of 12 months whereby the lender and the borrower could come together and there would be no penalty clause for the borrower if he or she got into trouble. If the borrower got his or her job back or his circumstances improved, the extra year allowed could be added on to the end of the mortgage. That is one way of doing it. If two people lost their jobs and were unable to meet their mortgage commitments we would have to examine the possibility of the bank having a rental scheme to suit people like that.
Senator Harris is right. This will have to be done because if we do not do it we will wind up with another agency to deal with this aspect. We should ensure that the legislation covers all banks in this State, not just the six banks we guaranteed. We have sub-prime lenders who are bringing their clients to court at the moment. They are the people outside of the system who are the hardest to deal with and we should bring in legislation to deal with that but it must be separate legislation. The Minister said he is looking at that question. We can spend all day here talking about the other problem. Let us deal with this problem. This is the hand we have been dealt.
There was some confusion in the debate last night on the €54 billion. That is an estimated value. We may have to review downwards that valuation when due diligence takes place. That is the reality. With the best will in the world, and we do not all have a crystal ball to look into to get the answers we want, this is the best guesstimate we can come up with at present. It is important that we pass good legislation to ensure this Bill works well when it is put to the test. There has been very good debate on the Bill and no guillotine has been imposed. We had a late night last night, and I must say I work better early in the day. One does not do as well at night-time.
This is a business Bill. There are three arms to this Bill: the special purpose vehicle, the credit system that will create, and the business sector. The first objective is to get credit flowing, and that is where our valuation and our bond system comes in. That goes back in to ensure the banks have money to lend. We then have the special purpose vehicle which will have an investment sector. That will kick in and then we have NAMA, which is the main agency to ensure that we have a working relationship with all three. On the basis of that, and the legislation we are drawing up here, we should have a reasonable prospect of ensuring we get lending back into the banking system again. Our banking system will be much healthier after this measure but it is our job, as public representatives, to ensure that the taxpayer is not exposed. We have covered that in the Bill by ensuring that if there is a shortfall the banks will have to pick up the Bill.
I thank the Acting Chairman for the time given. We should not spend too much time considering what might happen in terms of the ordinary mortgage holder. We must now bring in legislation urgently to deal with that.
I want to make one or two points on the section but I want to make a preliminary remark in regard to what Senator Harris said earlier. Senator Harris has crossed the floor of the House to the Independent benches but he is a most effective apologist for Fianna Fáil and what the Government is doing both in this-----
We dress up the defence of the Government but I must take issue with the criticism Senator Harris made of the business plan. In the debate last night a Minister said that the Minister, Deputy Lenihan, never said that NAMA would definitely make a profit yet we have a business plan which suggests a net profit of €5.48 billion over the ten years. Senator Harris is saying it is not relevant whether it is or is not a profit. Are we serious about the business we do in this House? This plan was sold to the country as the financial underpinning of the NAMA legislation. We are not dealing with figures in this Bill but this is the background document on which we must rely. Senator Harris is suggesting we do not refer to that document-----
The word "may" in a Bill can mean "shall" but in this instance it does not. I suggest the Minister could cut short the debate on this entire section by changing the word "may" to "shall". I understood this was part of the undertaking given to the Green Party and part of the Government-Green Party new deal that there were to be commitments on lending. This was a watered down version of that commitment, a bit like the levy, but I would have thought that a commitment that the Minister shall issue guidelines was the minimum that would be expected in that context but since the Minister has indicated that it is the intention to issue guidelines, we could cut this debate short by simply changing the word "may" to "shall".
That is what should give us urgency in this matter. At present, it is companies such as Start Mortgages which are involved in the sub-prime area. That company refuses to be interviewed and to be subject to questioning.
I will be succinct, and I hope that the Acting Chairman, Senator Cummins, will soon find it possible to put this to the House.
In January last I proposed to this House the establishment of something I called the national property management agency. I will not rehearse all of that, but I just want to signal it. I returned to the matter four times. At that very early point I suggested something that chimes with what was stated by Senator Harris, who went to the heart of the issue, on the experiences of the estimated 200,000 or 300,000 people who may find themselves in negative equity and in difficulty.
I ask the Minister to take this up. At that stage I suggested the creation of a portfolio of Minister of State for home security - not homeland security like that of the idiot Bush - because we have a primary responsibility to the people of this country.
I thank God I have paid my mortgages. I have no mortgage. I have no debt. I even have the prospect of-----
I am a real catch, honey.
Because I went through it the last time, I really empathise with people who are in this position. We must move as rapidly as possible and get something done. Once again, I throw out this suggestion of a portfolio to deal specifically and urgently with this question.
I hope that we can move on and perhaps get to Report Stage. Senator O'Toole wants the question to be put to the House and I support him on that.
On the qualifying eligible assets, there are some serious situations arising here and without naming it, I wish to come to one specific matter of which the Minister has been made personally aware. In the case of a company in the renewable energy field, probably employing in the region of 500 persons and which had, say, €100 million in security and maybe €50 million in loans, because of the definition NAMA has clarified that all of that has been taken in, even though they are performing loans. The company has a contract to complete by Friday, say, for another €11 million, which, on the existing security, the bank is more than willing to lend because the company is good for it, but because all of the existing security is being proposed to be transferred to NAMA, the bank now finds that it cannot advance the €11 million on the alternative security. This is a crazy situation where this company could be liquidated by court order for something that has been sanctioned because of a nonsensical rule within the NAMA proposal. The financial institution concerned is comfortable to lend.
This is pertinent to what we are dealing with on section 210, on the guidelines. I would plead that in all such cases NAMA not be allowed take an excess, especially where these are performing loans. This is not something that is non-performing. I refer to performing loans that NAMA is taking because they are related under the guidelines, under the definition section, as a qualifying eligible asset.
This is nonsensical. We must free this up for the sake of our economy and for the sake of companies. I refer to a specific company, with 500 persons employed in the south, which is facing completion of a contract on Friday for €11 million, where the bank had sanctioned it but NAMA is taking the existing security, which it does not need at all. One would understand it in the case of a non-performing loan. These are performing loans but, because of the definitions, this is all being taken in.
I will follow this up with the Minister, Deputy O'Dea, afterwards. I raise the matter here on this section because it is sensible that the Government amend this, in all our interests and in the interests of the economy, so that NAMA not be allowed take all of the existing security in the case of performing loans that are being transferred because of the definitions in the Bill.
I am not familiar with the case to which Senator Coghlan refers but I certainly will be happy to talk to him about it later. It is not in the interests of anybody that, unintentionally, a good company employing several hundred persons is forced into liquidation, and I would not like to see such a situation.
All I would say to Senator Coghlan on the performing loans is that NAMA deals with certain categories of loans. Whether loans be performing or non-performing, if they fall within the category they come into NAMA.
Maybe this issue can be sorted out. I will talk to Senator Coghlan about it.
On the use of the word "may" or "shall", I reiterate the commitment the Minister gave in the lower House that he will introduce guidelines. He may well introduce a number of sets of guidelines. For example, he intends to introduce guidelines from time to time to respond to sectoral credit problems as they arise. In that case, in view of the fact that the Minister wants to take on himself the right to introduce guidelines from time to time, the word "may", I am advised by the parliamentary draftsman, is the appropriate word to use. The word "may" gives the Minister a power, "shall" creates an obligation.
Section 22(1) of the Interpretation Act 2005 provides "A power conferred by an enactment may be exercised from time to time as occasion requires." We have sought the advice of the Attorney General in view of the points made here this morning and he has reiterated that "may" is the appropriate terminology in this case, in view of what the Minister wants to do.
I listened to various Senators outlining what the banks might do with the money. Let us assume it is €54 billion. As Senator Butler stated, we still must work out the exact amount. It might be more, it might be less - I would say, probably less. Is it seriously being suggested, as some have appeared to suggest, that putting all of these billions of euros together with the billions of euros we are putting in to recapitalise the banks into the Irish financial institutions, whilst at the same time taking the problem loans out of the banks, will make no difference? That is not sustainable.
I appreciate that. However, I am just saying if anyone is under that impression, it is an illusion.
On the Department or the Minister for Finance intervening in the banks to ensure that credit flows, if the thing is not working as we intend it to work, if that fundamental first purpose set out in the purposes section of the legislation is not being achieved, of course we will have to intervene again. If we must intervene again, we will not necessarily have to use a different vehicle. A bank, if it is to stay in existence for any time at all, must act as a bank whether one calls it a good bank, a bad bank or an indifferent bank. That is the reality of life.
Senator Harris and other Senators mentioned the question of those who, unfortunately, are running into arrears with their mortgages. The Government is conscious of that situation and has discussed it at the Cabinet table. The Government has already announced that it is taking measures to deal with that and in the measures we are taking and in the way we will implement those measures, we will have recourse to the expertise of NAMA and the National Treasury Management Agency.
I reiterate that the Attorney General's advice and the advice of the parliamentary draftsman is that "may" is the appropriate terminology here because the Minister intends to introduce guidelines but he may want to introduce guidelines at different times to deal with different sectoral credit problems as they arise.
It is because it is a State body. The income accruing to NAMA accrues to the State, so what we would be doing by taxing the income from NAMA is to have the State apply income tax on its own income to hand back to itself.
We were told that all of the bonds it is handling for the State are exempt, although the investors and whatever dividend they are paid are not exempt. I understand this because this involves income for these individuals. The Minister is suggesting that any profits made on handling these bonds and in dealing with them on behalf of the State, which are being handled by the SPV on behalf of NAMA, which is still a private company-----
No tax is paid on the money which the SPV pays to NAMA. NAMA has a special purpose vehicle which operates as a separate legal entity at arm's length from NAMA itself. For example, NAMA might decide there is a certain element of rental income which it will securitise and put a price on, and that is made available in a special purpose vehicle. The reasons it is done this way is so that the ordinary investors can put money into it without fear of being dragged down by anything that might happen to NAMA. Those investors will pay tax in the normal way. The money they pay to NAMA will come into NAMA, and it would be ridiculous to suggest that the Government would tax itself to collect money that will go to it in any case.
The important point the Minister should reassure us about is that the investors in the special purpose vehicle would be like investors in anything else, namely, they would have the normal levels of risk and taxation. Let us be clear about this. What they are doing is taking some of the impaired assets from NAMA and we are getting rid of them. This is part of the process of which we are in favour. However, nobody will get away tax free. The only one that will not pay is the State, for the simple reason that the tax would come to it anyway. No individuals will get away tax free on this.
NAMA is a State body not subject to tax. The SPV will be subject to tax because it will be in possession of a great deal of property and it is the SPV which is the property owner and the entity holding the title to the properties. If there was one major, dominant player in the property market which was not subject to tax, this would seriously distort the market. My understanding is that the profits made by the SPV will be subject to tax in the normal way. If it pays a dividend to NAMA, that will not be taxable. That is the position, as I understand it.
I raise a point I referred to on the Order of Business this morning on accountants working in Ernst & Young, which is carrying out work in the Irish Nationwide Building Society. Its charges are €3,000 a day for a senior accountant and €800 a day for a junior. As we have gone down the route of paying this type of fee in the tribunals, it is an issue the Minister must immediately take on board, not when the matter is over and done with. The winding up and amalgamation of financial institutions will happen. If we are not prepared to say what the fees will be at the very outset, we will end up with the same situation we have seen in the tribunals.
On the role of public representatives - Deputies, Senators and councillors - in making representations to NAMA, this section is pretty strong with regard to a person communicating on behalf of another person, providing advice and so on, and it refers to the initiation of legal proceedings. What is the role of the public representative as far as NAMA is concerned? The Minister stated NAMA would be subject to parliamentary questions, which are very important, and subject to debate in the House, hopefully. What about the representations made by councillors, Deputies and Senators if there is a problem with a particular property? What would my role be if I contacted NAMA in regard to a person owning an adjoining property, for example, and tried to influence NAMA not to proceed with the project?
Senator Coghlan raised an important issue with the Minister. If this Bill is enacted before Senator Coghlan speaks to the Minister about the issue he raised, will he commit an offence? It would seem that any type of lobbying would be an offence under section 221.
I welcome this section. It is about time we had governance concerning lobbying. I do not believe Senator Coghlan is in the slightest difficulty because section 221(3) states it is not an offence if the communication is made in public. It could not be more public when it is in the arena of the Oireachtas.
Senator Coghlan has been absolutely clear about it. Section 221(3)(b) refers to a situation where the communication is made "without an intention to benefit, or confer an advantage on, any specific person" and section 221(3)(c) refers to where the communication "is made in the public interest".
Most of the Members who spoke on this issue are present again today, although one Member on the Government side who spoke is not here. I indicated there is a specific case for each provision included. Why not? They are all covered and protected. I would hate to see us adopt the model of professional lobbying that exists in the United States, whereby large multinational corporations lobby extensively. Consider what has happened to President Obama's health Bill. Events unfolded as they did in this regard because corrupt corporations are spending millions of dollars lobbying politicians. There are people at Capitol Hill who do nothing else, which is obscene. Providing information and making attempts to represent the interests of one's constituents, save jobs and create employment in one's constituency are marvellous and to be applauded. When this is done in the public forum of the Oireachtas, there is nothing underhand about it. It is about time we had lobbying legislation.
It is a pity our legislative provision on lobbying extends only to one section of the National Asset Management Agency Bill 2009. I hope the Government will consider introducing full legislation on lobbying, not with a view to outlawing it completely but to ensuring it is above board, can be held up to scrutiny and is carried out honestly and fairly. I am all in favour of that.
While I do not disagree with Senator Norris, I contend we need to differentiate clearly between public representatives lobbying and making representations. People are happy with how the political system operates in Ireland as it gives them access to public representatives to make their case on any given subject. Provided people meet the appropriate criteria pertaining to getting whatever they are making representations on, I do not see a difficulty.
Senator Alex White has withdrawn his amendment to section 221. I ask the Minister to consider the issue because it relates to an employee of NAMA or a NAMA entity or somebody acting on behalf of NAMA who is approached or lobbied to make a certain decision in favour of a person, issue or valuation. The provision compels the employee to report the fact that they have been communicated with. Subsection (6) makes it an offence for the employee not to report the communication. While one may be ill-advised not to communicate the information to the Garda or one's superiors, one's not doing so should not be an offence.
The answer to all these questions, as Senator Norris indicated, is in subsection (3). The key phrase concerns whether the communication "is made in the public interest". This is the line of which we must be on the right side.
Senator Coghlan gave an excellent example of how it should be done. Regardless of whether the public interest is served in the Oireachtas or in a meeting with another politician and some of his officials, if a communication is made in the public interest rather than in the name of professional or personal gain, it is clearly in the spirit of what is mandated in the legislation. If it is not, one is fined or one goes to jail. That is exactly how it should be given how important the agency will be.
I will be happy if, as politicians, we will all be free to continue to act in the public interest. It would be wrong if politicians could not talk to each other, as we do, in the public interest, be it in respect of a specific case or a general one. It is very important that our ability to do so be protected. From what Senator Donohoe and others have stated, it is protected and we should be happy with that.
We are not professional lobbyists but we are guarding the public interest in a general way and sometimes in specific cases. The Minister's offer to talk to me is a case in point. I do not want to put on record the name of the firm I have in mind. There could be multiple cases of this kind because of the way the legislation is framed. We must get the economy moving again and free up credit. In the case to which I refer, the bank is prepared to advance the additional €11 million or €12 million but is being prevented by NAMA from having the security needed to cover the loan. Although everything is performing, all the security, which is way over the top, is going to NAMA.
This discussion goes two ways. Senator Coghlan is absolutely correct in stating that if an issue requiring public representation arises, one puts it on the record and deals with it. Let us not get carried away in deciding where this takes us. In this regard, one should consider what occurs if one goes across the line and discusses making decisions on tendering, the sale of property or legal proceedings.
We should have a discussion in this House on governance.
Plenty of people were prepared to make comments on how FÁS worked. FÁS was characterised by an absence of governance.
Yesterday we approved an audit committee for NAMA. An audit committee will be operating next year and it will consider four or five issues of importance in connection with NAMA's business. Let us consider four: the purchase or sale of property; a tender; the engagement of the services of and payment of an expert adviser; and legal proceedings. The committee will bring in external auditors who will stress test the process from start to finish. They will consider a few tenders and determine how they were granted. If in the middle of doing so they find some note that a public representative made a private phone call to a person in charge of the tender, the tender will be challengeable. In this regard, one should consider the issue of phone licences.
That there is some doubt in our minds as to what we can and cannot do is disgraceful. That anybody should have such a doubt is disgraceful. We should close the door and have a discussion on how we should proceed.
Senator Alex White is correct that one must include the proposed measure. That Senator Coghlan has a doubt about what he can do is bad. There should be no doubt whatsoever. We represent, speak out, put information on the record and put forward the agenda. That is what we do. The day lifting the phone to ask a Minister to make a phone call to somebody else is gone.
The sooner, the better. The Minister should issue a guidance chart. The Department of Finance has issued three or four in recent years. One is Welcome to the Board, a document for people on semi-State bodies. Another concerns governance issues. Recently the Department issued a third, an update on how governance should operate. Anybody who does not know how it operates should not be in the Oireachtas. There is no question that this is crucial to how we do our business and to the importance we attach to ourselves. We should not have to hold back on issues of importance to us and what we believe to be solutions that must be made work.
Let us be clear about what the Minister was saying about asking questions. He will answer questions in the Houses on the operational issues but not on how or why a tender is granted, or on why legal action is taken. There are boards all over Dublin city and if they heard a Member say we could intervene in the sale or purchase of land or in the issuing of a tender - in fairness, no Member has - they would find it outrageous.
My party has called for such legislation on a number of occasions. I am in complete agreement with Senator O'Toole. Perhaps it is good that this matter was raised, precisely for the purpose of having it knocked on the head so sharply in this context.
There is an interesting cultural exchange across the floor between the Opposition and Senator Leyden. He is making it very clear that he believes we are being too extreme or adopting a politically correct position. I have heard this before but it is part of the reason we are where we are in this country. Senator Leyden may smile, laugh and joke about it all he wants. While we have resisted partisan comments for most of this debate, I must say the system he is defending is part of the problem in this country and it is associated mainly with his party. This is the difficulty we are in.
Senator O'Toole is correct that there should be no question at all of this issue arising. I do not care if I sound politically correct or holier than thou. Section 221 is one of the most important in the Bill. I believed it was one of the most uncontroversial and such is its importance that I am amazed it is receiving even two minutes' attention. Anybody who believes politicians are covered under subsection (4), which refers to one acting in a professional capacity, had better think again because politicians certainly are not.
-----there is nothing in this provision which we should fear. This provision is being included because there is a sense that we got to where we are, in terms of how dealt with issues like this in the past, because of a tendency to be furtive, clandestine and conspiratorial, which has been to the loss of our political system. The best way of addressing how this will be done in the future and how we can prevent this from happening again is by having recourse to these provisions.
I am the longest serving Member of either House of the Oireachtas. However, I do not mind if I am a minority of one. When I served in the Departments of Posts and Telegraphs and Transport, I received representations from public representatives from all sides. The Green Party was not around at that time, which is a long time ago. I was lobbied by Fine Gael and the Labour Party.
I am making the point that there is something wrong if public representatives, be they Deputies, Senators or councillors, cannot communicate their constituents' concerns. We are not speaking here of lobbyists making money. One cannot communicate with the Health Service Executive which is above reproach. In addition, one cannot contact An Bord Pleanála because-----
I am interested to hear from Senator Boyle that the Green Party is responsible for this provision, which is fair enough. I accept his point. I am making the point - I may be in the minority in this regard - that when one sees a situation where-----
If making a point of behalf of a constituent or somebody else, he will have to make all communications in that regard public. Paragraph (3)(b) states: "is made without any intention to benefit, or confer an advantage on, any specific person, or", which is fair enough. This would mean that a widow with a small site adjoining another with which problems have arisen cannot make representations.
Paragraph (3)(c) states: "is made in the public interest". It is obvious the representation would be in the public interest.
When one communicates with a person, he or she must note the communication and report it straight away to a member of the Garda Síochána. This means if one picks up the phone and contacts an official of NAMA in regard to an issue on behalf of a constituent one could end up being fined €1,000, sentenced to six months in prison, or both.
Doing so is part of one's life. One might as well give up altogether and close the Dáil and Seanad and not have any public representatives because they will not be needed. I never heard such righteousness in all my life. I do not mind if I am a minority of one in this House explaining my point, as did people, who in the parliamentary party in 1970s, said that when we set up Eircom and An Post there would be no more communication with them and they would ignore people and public representatives. I believe NAMA should respond.
I spoke on this issue on Second Stage. I have been a Member of this House for a long time and frequently raise issues on the Order of Business and by way of the Adjournment debate. If I have to use this House to raise an issue in regard to NAMA, I will have no hesitation whatsoever in doing so-----
There is nothing to stop Senator Leyden or any other Senator or Deputy raising in the Seanad or Dáil general or, even specific, issues in regard to NAMA. There is nothing to stop them putting down parliamentary questions in this regard to the Minister for Finance who will, of course, answer to Parliament for NAMA.
-----with the intention of influencing the making of a decision in relation to the performance of the functions of NAMA. The function of NAMA will be to get credit flowing in the country again. NAMA has an obligation. The Irish people are making a huge investment in NAMA, whose obligation it is to recoup that money on their behalf. It cannot be subject to secret lobbying.
It provides an exemption to a person who is acting in his or her professional capacity or in the course of his or her employment. I would not like to chance that one.
If one is charged under subsection (3) of the offence of approaching NAMA one can defend-----
One can defend oneself on the grounds that such an approach is made public at the time of the communication, is made without an intention to benefit, or confer an advantage on, any specific person, or is made in the public interest. These are three standalone provisions any one of which will get a person off the hook. It would be wrong to say that if Senator Coghlan wants to speak with me at a later stage he must publicise that if it is in the national interest.
Amendment No. 66 is a new section. Amendments Nos. 66 to 68, inclusive, and amendment No. 70 are related and may be taken together by agreement.
Government amendment No. 66:
In page 131, before section 222, to insert the following new section:
222.—(1) Where a person who is an employee of a participating institution or an officer of NAMA communicates his or her opinion, whether in writing or otherwise, to a member of the Garda Síochána or a member of the Board that—
(a) an offence under this Act or any other enactment has been or is being committed,
(b) any provision of this Act or any other enactment or rule of law has been or is being contravened, or
(c) there has been other serious wrongdoing in relation to NAMA,
then, unless the person acts in bad faith, he or she shall not be regarded as having committed any breach of duty towards any other person, and no person shall have a cause of action against the first-mentioned person in respect of that communication.
(2) Where a person who is an employee of a participating institution or an officer of NAMA communicates his or her opinion, whether in writing or otherwise, to the Minister that a direction given by the Minister under this Act has been or is being contravened, then, unless the person acts in bad faith, he or she shall not be regarded as having committed any breach of duty towards any other person, and no person shall have a cause of action against the first-mentioned person in respect of that communication.
(3)This section applies to a communication—
(a) that would, but for this section, constitute a breach of duty by the person who made it, or
(b) in respect of which another person would, but for this section, have a cause of action against the person who made it.".
Wrongdoing can take place in any organisation regardless of whether it is in the public or private sector and even where proper internal financial control structures are put in place. Unfortunately, there have been several examples of this in recent times.
The Minister has included several sections in the Bill relating to the disclosure of information to the various authorities, where appropriate. On reflection, and arising from the Dáil debate, the Minister has further decided to add specific provisions into the Bill which will protect bona fide whistleblowers if they report wrongdoing. This whistleblower protection extends to officers of NAMA and participating institution employees, regardless of their position within the organisation, which is correct. It can be difficult to legislate for whistleblower protection. It is important to strike a balance between providing protection for the individual and the need to deter people from making false allegations. The proposed amendment is framed in such a manner as to ensure this balance is struck.
The proposed amendments are largely based on the amendments to the FÁS legislation recently introduced by the Tánaiste. The proposed sections provide protection from civil liability for employees of participating institutions and officers of NAMA who make a bona fide report of offences being committed under any enactment or serious wrongdoing in regard to NAMA. The individual can make the report to the Garda Síochána or a member of the NAMA board. The proposed sections also provide that it is an offence for an employee of a participating institution or an officer of NAMA to make reports in bad faith to the Garda Síochána, members of the board of NAMA or the Minister for Finance. That provision is included to discourage persons from making false accusations of misbehaviour. It is important that persons are responsible for their actions and do not abuse the whistleblower protection.
This is an important section relating to the whistleblower's charter. I urge the Minister to introduce broad legislation covering the rights of persons who make such disclosures. I am aware of a number of examples. I know of one in a health facility where an employee saw mistreatment of disadvantaged people who were vulnerable. They made an anonymous telephone call and discussed the issue with agencies of the health arm of the State. Eventually that intervention was divulged to the employers. Others who had witnessed the behaviour had confirmed and discussed it but subsequently denied it. The job of the person concerned was placed in considerable jeopardy. Anything that protects whistleblowers is good, but it has to be balanced. The Minister has done this through the second amendment covering false accusations which can be devastating and should not be entertained.
The one thing that concerns me - I would like the Minister to re-examine the matter - is that the fines and penalties are considerably more severe than for the offence we have just been discussing. It would be appropriate for these two offences to be harmonised. Attempting to interfere illegally with the operation of NAMA should be treated at exactly the same level of seriousness as an individual making a false accusation against someone. In the case of a corrupt intervention or lobbying offence, the fine is not to exceed €1,000, or imprisonment for six months, but in the case of somebody who makes a false accusation, it is €5,000 or imprisonment for 12 months. I do not understand the discrepancy in the fines, as they are equally serious offences. If anything, the offence under section 221 is more serious; therefore, I do not think it should attract a lighter penalty. I urge the Minister to re-examine the issue.
I indicated last night when the Labour Party whistleblower amendment was moved that I was prepared to withdraw it on the basis that the Government's amendment was progressive. I welcome it. The Minister has acknowledged that the amendment is a response to concerns raised by my party and others in the Lower House in respect of this issue. Therefore, I welcome the amendment he has tabled in response.
I drew some distinctions between what we had proposed and what the Minister was proposing. One issue I overlooked last night but that has now come to my attention is that there is protection from civil liability but no protection from criminal liability which was contemplated in the Labour Party amendment. What is the thinking behind the Minister's decision that it would not constitute a civil wrong but that criminal liability could arise?
It has been evident in recent years that it is not always possible for the Garda Síochána or even a member of the board to instil confidence in a whistleblower that he or she will be protected. The Minister is aware of cases in which persons who have acted as whistleblowers have had their names released, either directly or indirectly, to their employers, which has had a detrimental effect on their career. One of the changes that could be introduced would be to allow complaints to be made to a Member of the Oireachtas or a member of the board of NAMA, in addition to members of the Garda Síochána. If a person were to give information to me on wrongdoing in regard to NAMA, I would make the best possible effort to clarify the information and ascertain it was correct. I might check with the Minister on whether it was true before I would say anything publicly. That would give protection to the individual concerned, as he or she would be one step removed from people finding out who they were.
Complaints made to members of the Garda Síochána have to be written down in report books and a detailed file must be compiled, which could be accessed by someone else. The PULSE system has been accessed by individuals who were paid by criminals to do so. The board of NAMA would be deeply involved with people in NAMA, which could give rise to a conflict of interests. I urge the Minister to consider making a change to the effect that complaints could also be made to Members of the Oireachtas. There are only 226 Members and most of us could be trusted not to do something that would be detrimental to NAMA, or that would in any way be wrong. We do not abuse parliamentary privilege. That would be a useful change. The Minister has seen cases in which members of the Garda Síochána have made information available and their names find their way into the public domain eventually. I propose that Members of the Oireachtas and members of the board be included in the provision, with members of the Garda Síochána.
I support Senator Twomey whose contribution is significant. The House should bear this specifically in mind because of the recent case involving former Senator Jim Higgins and Deputy Brendan Howlin who found themselves in some legal difficulty in regard to their sources. That is a good point. The more I think about it the more strongly I believe the Minister should harmonise the penalties in section 221 between whistleblowers and persons who act corruptly because the potential gain and sums of money involved are astronomical. There is potential for criminal, deliberate and perverse corruption of the system, which is very serious. In many cases a person who makes a false statement to the Garda Síochána does so not just out of malice but because he or she is a little unbalanced. At least the fines and terms of imprisonment should be the same for both offences. If I was a corrupt business person and saw the possibility of securing a contract for myself or an ally that would reward me in terms of millions, I do not think I would be deterred by a slap on the wrist or a €1,000 fine. I would not be that much more deterred by a €5,000 fine but it would make the point that the offences were at least at the same level. I have thought about the matter since I first raised it and will be tabling an amendment straightaway. I believe my colleague, Senator O'Toole, will be prepared to second it.
With regard to synchronising the offences with the offences under section 210, I am advised the whistleblower provision is modelled on a similar provision in the FÁS legislation, so the same penalties are applied. The Deputy has a point and I will bring it to the attention of the Minister.
On Senator Twomey's point about being able to report to Members of the Oireachtas, I believe that if a Member of the Oireachtas receives a report of serious wrongdoing in this regard, they will bring it to the attention of the Garda Síochána. I will mention the Deputy's point to the Minister as to whether it is possible to extend the protection where the report is given to Members of the Oireachtas. As regards Senator Alex White's point about criminal liability, it is not a crime. The whistleblower is not committing a crime, even if he or she is wrong. The only possible exposure he or she has is to civil liability, which is why he or she is only protected from civil liability.
I move amendment No. 69:
In page 132, subsection (4), lines 23 to 27, to delete paragraph (b) and substitute the following:
This relates to the levy that will be applied if NAMA does not make a profit. The levy will be applied to the institutions according to the loans they submit to NAMA, not according to the losses the loans made. Let us assume that 30% of the loans are from Allied Irish Banks and that of the total losses made by NAMA at the end of the decade, 15% relate to the Allied Irish Banks loans. One would assume that the levy applied to Allied Irish Banks would relate to 15% of the losses made. However, it appears from the way this provision is structured that 30% of the levy will be applied to Allied Irish Banks because it submitted 30% of the initial loans. That is my interpretation of the provision. I believe that is wrong. If 15% of the losses result from AIB loans, 15% of the levy should apply to that bank.
I discussed this previously with the Minister, Deputy Brian Lenihan. I suggested that the levies be applied from the start but he said that would be counterproductive to what we are trying to do, which is give stability to the banking sector and confidence to investors that we will get the banks up and running. However, investors know that in ten years an undefined amount of losses could be made and that Allied Irish Banks and Bank of Ireland could be penalised for Anglo Irish Bank's losses, as it appears that Anglo Irish Bank will account for the majority of the losses from these loans. Furthermore, Anglo Irish Bank might not even exist in ten years. From the investors' point of view, there is much insecurity about what this means for Allied Irish Banks and Bank of Ireland. There is not just a sense of unfairness about this provision but it could also cause instability and lack of confidence regarding the two major banks ten years hence.
I am conscious that the officials and the Minister are probably concerned about spooking the market in terms of how specific or prescriptive they are on the surcharge, but further clarity is required. I do not support the amendment but how will the surcharge be calculated? As Senator Twomey said, if one were to predict now the least likely to make a profit, it would be Anglo Irish Bank and it would also be the most likely contender in terms of any losses that might be sustained. It is not clear how the level of surcharge will be apportioned to each institution. We need more detail on that. Apart from Anglo Irish Bank it is theoretically possible that some of the institutions will make profits while others will not. Does that mean we lose because we are only in a position to apportion whatever percentage of surcharge on the profits made versus the percentage of loans originally taken over by NAMA? That is a concern and I believe the public would like us to be a little more definite about potential losses. Of course we are all very hopeful, if not confident, that it will be in a break even, if not a profitable, position and that this will not arise. However, as with section 210 and the valuations issue, this is a key issue for me. It would be good if we could get more detail on it.
I am conscious of spooking the markets unnecessarily but it would be reasonable if banks were to pay into a fund a percentage, to be determined by the officials and the Minister, from any profits made per annum over the next ten years in anticipation of any prospective loss. It is prudent to put it aside notwithstanding that we are hopeful, if not confident, that NAMA will be in a profitable or at least break even position. It would give further comfort to the public if an amount of any prospective profits over the next ten years were put aside by the participating institutions.
To recap, how will the surcharge be split in the event of a loss, as some will be profitable and some will not? Can we put provisions in place whereby profitable institutions would put funds aside?
Section 222 provides for a future surcharge on the participating institutions in the unlikely event of NAMA making a loss. This section has been carefully drafted to strike the necessary balance between, first, affording the taxpayer maximum protection against the possibility, however unlikely, that a loss might eventually arise and, second, the risk that the application of a statutory surcharge could result in the participating institution having to provide for a future liability in its accounts in line with international accounting standards. It strikes the balance by providing for an effective statement of intent that a surcharge may be imposed by way of a Finance Act provision at a specific point in the future in the event of NAMA having made an aggregate loss at that time. The loss will have to be certified by the Comptroller and Auditor General, based on his or her auditing of the accounts of NAMA from its establishment to the date on which the surcharge is to be applied.
The proposed surcharge will have the following characteristics. No surcharge will apply until at least ten years after the passing of the NAMA Bill. The aggregate surcharge to be imposed will not exceed the loss incurred by NAMA. The surcharge will be apportioned among the participating institutions according to the book value of the assets transferred to NAMA. In other words, the aggregate book value of all the assets transferred from the different institutions will be examined and the proportion of the surcharge for which any one institution will be liable will be the percentage of assets it transferred to NAMA. The other characteristic is that the surcharge imposed on any institution will not exceed the amount of corporation tax due in that period.
The proposed amendment provides another way of calculating the participating institutions' contribution to the surcharge. We believe the way proposed in the Bill strikes the balance better than what the Senator proposes.
The way it is structured in the Bill means that Allied Irish Banks and Bank of Ireland must try to put funds aside for Anglo Irish Bank's losses. Anglo Irish Bank is more likely to have the larger losses in the loan book that is transferred to NAMA. If a surcharge is imposed in ten years, it appears AIB and Bank of Ireland will have to make allowances for that.
When I brought forward a proposal that the levy should be introduced from the outset, I was ridiculed by the Minister for Finance on the basis that what I was suggesting would spook the markets. What will be the effect of the proposal that in ten years' time some of the participating banks will be responsible for the undefined losses incurred by Anglo Irish Bank, Irish Nationwide and any other institutions which have unbelievably bad loans?
No one will take any pleasure from NAMA failing. If, as time passes, a significant level of losses build up and if Anglo Irish Bank and Irish Nationwide disappear, the remaining participating institutions, which are dealing in a smaller and less profitable market, will be obliged to shoulder the losses to which I refer. We are not discussing the fairness of what is being done, rather we are concerned with the effect on the financial sector of that to which I refer, which sector, as already stated, may be obliged to take a further hit in ten years' time.
I accept what Senator Twomey says. The question that arises is, in the event of NAMA making a loss - I hope it will not do so - whether the taxpayer or the participating institutions should bear that loss. Either one believes it should be the those institutions or one does not. If there is going to be a future liability, I accept that this will overhang the successful participating institutions. However, we have tried to avoid creating a situation whereby these institutions will be obliged to provide for this on their balance sheets by way of a contingent liability because this would have a detrimental effect. We are trying to repair those balance sheets rather than do something which would have further adverse effects on them.
We have tried to ensure the banks will not be obliged to put money aside. There could be a surcharge in ten years' time. The most effective way to assess the percentage each participating institution will contribute to the surcharge is that laid out in the section.
My point is that in three years' time, when it is hoped matters in the financial sector will have improved, international investors will again become interested in our banking sector. It will then be pointed out to them that a surcharge may have to be paid in the future. NAMA may be showing good potential at that stage but if it is not, then we are only making more trouble for ourselves. What we are discussing revolves around achieving a balance between the taxpayer and the financial sector. There are those of us who believe taxpayers are receiving a raw deal in respect of the €54 billion they are investing, that the problems we are setting out to resolve may not go away and that the banks will be the ultimate beneficiaries.
We appear to be at cross-purposes with regard to what we are trying to achieve. We have already taken a hit and I am of the view that we should probably reconsider this matter in the context of how the financial sector might be affected in years to come. Since the Minister disagreed with me with regard to imposing the levy from the outset, perhaps we should leave out the entire sector until we see how NAMA's work is progressing.
We previously engaged in a good discussion on the need to review the activities of NAMA continually to ensure it delivers on the objectives laid down in the Bill. Section 224(3) states:
As soon as may be after 31 December 2012, and every 5 years after that while NAMA continues in existence, the Minister—
(a) shall assess the extent to which NAMA has made progress toward achieving its overall objectives, and
(b) shall decide whether continuation of NAMA is necessary having regard to the purposes of this Act.
Is five years too long a timeframe in this regard? If a decision is going to be made under this section with regard to whether the continuation of NAMA is necessary, surely the position should be reviewed annually or perhaps every two years.
Section 224(3)(a) goes to the heart of the matter. Under it, the Minister will be obliged to assess whether NAMA is working and make public the findings in that regard. In my opinion, the matter should be reviewed more regularly than every five years. Why was it decided to review the position every five years? Is there not a case to be made for reviewing it more regularly?
Section 223 states that the Comptroller and Auditor General will assess the position every three years. There are many reporting mechanisms in place. Basically, it comes down to whether we believe NAMA will be in existence for at least five years. I am of the view that there is little doubt that this will prove to be the case.
Would it not then make sense to have a review period that is shorter than five years? I may be missing something and perhaps the Minister will indicate if that is the case. It may be the case that by 2012 we will discover that there is a case for winding up NAMA. However, this is extremely unlikely. In such circumstances, therefore, after 2012 should we not review its activities more often than every five years? The Minister indicated that the Comptroller and Auditor General will carry out a review every three years. I am of the view that three years is a reasonable timeframe and I did not, therefore, make this point in respect of section 223. If we are stating that the Comptroller and Auditor General should be carrying out his review every three years after 2012, then surely that which is envisaged in section 224 should be performed more often than every five years. Perhaps it should be done every three years.
It is a matter of judgment. The review by the Comptroller and Auditor General will be carried out every three years. The ministerial review relates to the broader policy aspects of the legislation, the state of the property market and the evolution of the banking sector. These are wider matters and a longer period will be required for their consideration. That is why it was decided that the ministerial review should be carried out every five years.
Stating that there will be a ministerial debate every five years will not exclude NAMA from public debate. The legislation simply indicates that the Minister of the day will be obliged to carry out a review every five years. It would be undesirable for the reviews of the Minister and Comptroller and Auditor General to run parallel to each other because matters would become confused. That is the thinking behind the section.
I move amendment No. 69a:
In page 133, line 35, after "Act.", to insert the following:
"However, the text of this Act shall be published electronically in each of the official languages as soon as practicable after its enactment.".
I welcome the Minister, Deputy Brian Lenihan. Molaim leasú a dhéanamh ar an mBille ag an bpointe seo. Section 227 states: "Section 7 of the Official Languages Act 2003 does not apply in relation to this Act." An rud atá sa phíosa sin den Acht sin, I will read into the record, "As soon as may be after the enactment of any Act of the Oireachtas, the text thereof shall be printed and published in each of the official languages simultaneously". Bhí mé sa Teach seo ar 8 Aibreán 2003, nuair a bhí an Aire, an Teachta Ó Cuív, ag tógaint an reachtaíocht sin - Bille na dTeangacha Oifigiúla 2002 - tríd an Oireachtais. Ag an uair sin, nuair a bhí an tAire Ó Cuív ag tabhairt an Official Languages Act 2003 tríd an Tí, bhí leasú curtha ag an Seanadóír Joe McHugh, atá anois ina Theachta. Thug mise tacaíocht don leasú, ach chuir an Aire ina gcoinne. Tá an díospóireacht sin ar fad anseo agam, ach ní léifidh mé ach an abairt deireanach. Dúirt an tAire:
Tá an rud sa mBille iomlán slán agus ní féidir éalú uaidh. Ní féidir Acht ar bith a fhoilsiú gan é a dhéanamh go comhuaineach i nGaeilge agus i mBéarla as seo amach ...
In other words, he said the Bill was completely safe and there was no escape from it. No Act could be published from then on except in Irish and in English, provided the legislation was passed. The Minister did not understand the cleverness of the Department of Finance. It took one look at the provision and brought in legislation to the effect that in that one sense, section 7 of the Act does not apply.
Tuigim, nuair atá moladh á thabhairt agamsa don Aire - agus phléigh mé é seo leis cúpla mí ó shin - nach féidir liom aon rud a mholadh that will add to the costs etc. agus tuigim go maith dá mba rud é go raibh mé ag moladh go mbeadh seo clóbhuailte agus foilsithe i gcóip crua that there would be costs attached to that. Nuair a bhí an rud seo á phlé sa Teach seo sé bliain ó shin, bhí mise go mór den tuairim an uair sin that we should not have got into all the costs of printing annual reports in gloss and hard copy. I suggested to the Minister at that stage, that as long as these documents were published on the Internet, anybody who wanted them could print them off. However, that would not do the Minister, purist and virginal as he is. Such a thing would undermine the true Gael approach to matters. Of course, he was better off going off changing the name of my town and doing other things.
Cúpla bliain ina dhiaidh sin bhí an tAire sásta go mbeadh doiciméid foilsithe ar an Idirlíon. That satisfied everybody. Bhí mise an-sásta le sin.
Ag féachaint ar an reachtaíocht os ár gcomhair anseo, chuir sé an-díomá orm nuair a thuig mé go rabhamar chun éalú ón Acht chomh tapaidh sin agus gan focal ón Aire Gnóthaí Pobail, Tuaithe agus Gaeltachta who should, rather than I, watch these things agus gan focal ar bith ach oiread ó aon ceann de na heagrais Gaeilge who would queue outside my door if I wanted to protect the name of my town. There is no word from them nuair atá muid ag cur reachtaíochta ar fáil, gan é a bheith ar fáil i nGaeilge.
Tuigeann an tAire an motivation atá agam ag an bpointe seo. Creidim, ó thaobh dearcadh mhuintir na Gaeltachta de, go bhfuil seo scannalach agus náireach dóibh siúd. I ndáiríre, tá sé maslach chucu nach mbeadh an Bille nó an reachtaíocht ar fáil i nGaeilge. Fiú ón dtaobh praiticiúil de, some of the assets of NAMA will be lodged in Gaeltacht areas. Gaeltacht lands and assets will be involved in this. Aon uair a mbíonn aon agóid nó conspóid sna Gaeltachtaí faoi rudaí mar seo, má théann sé go dtí na cúirteanna - as it well may do - ba mhaith an rud é go mbeadh an reachtaíocht ar fáil i nGaeilge. Ba mhaith an rud é go mbeadh sé ar fáil do dlíodóirí, do mhúinteoirí, do shaoránaigh agus do ghnáth daoine. An rud atá á mholadh agamsa ná go ndéanfar an leasú ar seo.
Is ó Daingean Uí Chúis, Daingean, Dingle mé. Bhí trí ainmneacha i gcónaí ar ár mbaile go dtí gur tháinig an píosa reachtaíochta sin síos an bóthar chugainn. Anyway, níl mórán saibhris ar imeall iarthar na tíre seo. My area, is dócha, is not the richest place. Níl aon ró-shaibhreas ann. Ach is tobar na Gaeilge i ndáiríre é. Chomh maith le sin, is áit é ina dhéanann saoránaigh na tíre seo, muintir na Gaeltachtaí, caomhnú ar chultúr, teanga agus sean nósanna na tíre. Mar adúirt mé, níl aon ró-shaibhreas acu. Níl acu ach saibhreas a gcultúr agus a dteanga. Tá siad ag braith orainne go mór. Tuigim go n-aontóidh an Aire liomsa sa mhéid seo; tá sé de freagracht orainne gach seans agus gach deis a thógaint agus gach iarracht a dhéanamh caomhnú a dhéanamh ar chultúr na Gaeltachtaí, an Teanga - más féidir sin a dhéanamh - agus muintir na Gaeltachtaí.
I raise this issue because I want people to recognise the situation. I do not want people to see this as if coming from one of the kind of fascist groupings that often support the Irish language. I make this plea on a practical level. I want the people I went to school with and with whom I grew up to be able to do their business trí Gaeilge if that is what they want to do. I do not propose anything that will bring a huge cost to the Exchequer. There are no costs involved except translation costs, which would be involved at some stage anyway. Effectively, what I propose allows the Official Languages Act to be implemented, without the costs associated with it. In that sense, I am heartened to think the Minister will accept the amendment. That would make us all feel a bit better and would add to áilleacht na tíre.
Tá an Ghaeilge go flúirseach agam agus bhí mé ar TG4 cúpla oíche ó shin. Ba mhaith liom tacaíocht a thabhairt don leasú seo a mhol mo chara, an Seanadóir Seosamh Ó Tuathail. This is a good amendment for several reasons. First, it caters for people in the Gaeltacht. It also addresses the situation in a modern way. We are catching up with the electronic world. Also, and importantly, it involves only a small cost. Senator O'Toole was right to mention that some planning documents were printed in Irish and put on library shelves, but not one copy was ever bought or borrowed. Given the considerable costs involved, people have a reason to begrudge the money spent. However, publication in Irish is a constitutional requirement, but it is satisified at minimal cost through this amendment, which makes appropriate provision for people who speak our own language.
I compliment Senator O'Toole on his fluency and on his wonderful blas. It is a long time since I heard the word "náireach". I think I am correct in thinking it means shameful. Scannalach agus náireach. I do not think the Minister can withstand that blistering.
I support Senators O'Toole and Norris. It seems quite likely that in a few short years we will no longer print papers and annual reports in hard copy. Everything will be done electronically, although that may threaten An Post and others who expect people to send letters. Someone who spoke after me the other day mentioned he had received a letter in the post and found that unusual, because all of his mail generally came by e-mail. I believe we are not looking forward enough. The amendment makes great sense from the point of view of cost, but also from the point of view of modernity and of recognising where we are going. This is the way of the future.
Is iontach an rud é, ach tá mé chun an leasú seo a ghlacadh. Chomh maith le Gaeilge an-mhaith, tá eolas an dlí go han-mhaith ag an Seanadóir, mar níl aon fhadhb ag an Ard-Aighne leis an fhoclaíocht sa leasú seo. Mar sin, glacaim leis an leasú. An deacracht atá ann ná caithfidh go mbeidh leagan oifigiúil amháin sa Teanga don Bhille ar fáil nuair a síneoidh an tUachtarán an reachtaíocht, mar tá cinneadh le déanamh ag na bancanna atá ag dul isteach i NAMA. Caithfidh mé leagan oifigiúil den Bhille a ullmhú mar sin, ach beidh an leagan Gaeilge le fáil chomh luath agus is féidir. Tá sé sin i leasú an Sheanadóra fhéin. Beidh NAMA, is dóigh liom, deich bliain ag fás, agus ina dhiaidh sin, please God, beidh NAMA faoi bhláth. Táim an-sásta leis an leasú agus táimse ag glacadh leis.
Go raibh míle maith agat, a Aire. Táim thar a bheith sásta le sin. I really believe it is something many people will appreciate. The Minister will recall that the Government was very successful in getting Gaeilge recognised as one of the official languages of the European Union. There is a great opportunity to stress test how well that is working. I suggest the Minister first sends them a copy of the leagan Gaeilge den Acht seo. See how they translate it and compare like with like. That will show how well they are doing their job.
I very much appreciate the Minister accepting the amendment. It might seem small in the greater scheme of things, but by such a myriad of small things do great things emerge. Go raibh míle maith agat. Tá mé thar a bheith sásta le sin.
Rud eile, tá an raic seo an-chasta ar fad, mar is eól díobh go léir. Sin an fáth nach bhfuil an leagan Gaeilge le fáil anois. De ghnáth bíonn Rannóg an Aistriúchán ag obair ar an mBille roimh an tosnú agus bíonn an dá leagan réidh. Sa chás seo ní raibh fhéidir é sin a dhéanamh agus sin an fhadhb a bhí againn.
I want to ask about the changes the Minister proposes to make to the Planning and Development Act 2000. It is about extending planning for NAMA. When this is being extended, are any changes to planning permission being contemplated which might improve the overall environment and the green agenda when applications come up for renewal? This might not be directly connected, but are there any proposals concerning other planning where changes might be in train, even where they do not come up for renewal? If a person decides to improve his or her planning by adding solar energy or heat recovery units, will this entail an additional fee because it means changing the original planning application or will this fee be waived if such alterations improve the environment? That is not directly covered here. What is directly covered is that where the planning permission is extended in projects taken over by NAMA, efforts should be made to promote a green agenda, thus improving the environment.
I shall certainly draw Senator Twomey's observations to the attention of the incoming board. In fact, there is an amendment tabled to the Schedule, which will be addressed, I take it, when we discuss the Schedule, to ensure the capacity NAMA has to apply for or extend a planning permission will be harmonised with the proposal contained in legislation in connection with planning and development which I understand is before this House. The wording "at present" in the Schedule is somewhat different from that in the other legislation before the House so there will be a harmonisation of the legislation.
There has had to be one material difference, however. When a planning permission lapses NAMA will have a short time period within which to reapply for permission. There is a danger with an insolvent developer or builder that such a person could neglect to extend the permission. That provision is to protect the taxpayer, but other than that the scheme I am proposing under this section is the same as the one being proposed by the Minister for the Environment, Heritage and Local Government in the planning Bill before this House. Essentially, it means someone can apply to extend the permission. Such an application is subject to the decision of the local authority. It is open to the local authority to insert up-to-date planning conditions in the context of the application.
I am sure the windfall tax issue has been discussed in-depth with the Minister. This does not apply to one-off housing in rural areas. It has nothing whatsoever to do with, say, a family that wants to sell a small site for a house to one of its members or someone else in the community.
(6) Notwithstanding subparagraph (5), a rights commissioner may entertain a complaint under this paragraph presented to him or her after the expiration of the period referred to in subparagraph (5) (but not later than 6 months after such expiration) if he or she is satisfied that the failure to present the complaint within that period was due to reasonable cause.
(2) An appeal under this paragraph shall be initiated by the party concerned giving within 6 weeks (or such greater period as the Court may determine in the particular circumstances) from the date on which the decision to which it relates was communicated to the party, a notice in writing to the Labour Court containing such particulars as are determined by the Labour Court under subparagraph (4) and stating the intention of the party concerned to appeal against the decision.
(2) Where a decision of a rights commissioner in relation to a complaint under this Schedule has not been carried out by the employer concerned in accordance with its terms, the time for bringing an appeal against the decision has expired and no such appeal has been brought, the employee concerned may bring the complaint before the Labour Court and the Labour Court shall, without hearing the employer concerned or any evidence (other than in relation to the matters aforesaid), make a determination to the like effect as the decision.
4. (1) If an employer fails to carry out a determination of the Labour Court in relation to a complaint under paragraph 1 in accordance with its terms within 6 weeks from the date on which the determination is communicated to the parties, the Circuit Court shall, on application to it in that behalf by—
(2) The reference in subparagraph (1) to a determination of the Labour Court is a reference to a determination in relation to which, at the expiration of the time for bringing an appeal against it, no such appeal has been brought or, if such an appeal has been brought it has been abandoned and the references to the date on which the determination is communicated to the parties shall, in a case where such an appeal is abandoned, be read as references to the date of such abandonment.
(3) In an order under this paragraph providing for the payment of compensation, the Circuit Court may, if in all the circumstances it considers it appropriate to do so, direct the employer concerned to pay to the employee concerned interest on the compensation at the rate referred to in section 22 of the Courts Act 1981, in respect of the whole or any part of the period beginning 6 weeks after the date on which the determination of the Labour Court is communicated to the parties and ending on the date of the order.
5. (1) There shall be included among the debts which, under section 285 of the Companies Act 1963 (as amended by section 10 of the Companies (Amendment) Act 1982 and section 134 of the Companies Act 1990) are, in the distribution of the assets of a company being wound up, to be paid in priority to all other debts, all compensation payable by virtue of a decision under paragraph 1(2)(b) or a determination under paragraph 2(1) by the company to an employee, and that Act shall have effect accordingly. Formal proof of the debts to which priority is given under this subparagraph shall not be required except in cases where it may otherwise be provided by rules made under that Act.
(2) There shall be included among the debts which, under section 81 of the Bankruptcy Act 1988 are, in the distribution of the property of a bankrupt or arranging debtor, to be paid in priority to all other debts, all compensation payable by virtue of a decision under paragraph 1(2)(b) or a determination under paragraph 2(1) by the bankrupt or arranging debtor, as the case may be, to an employee, and that Act shall have effect accordingly. Formal proof of the debts to which priority is given under this subparagraph shall not be required except in cases where it may otherwise be provided under that Act.".
This is in Part 2 of Schedule 2, to insert "the Bank or" after "relating to". It is a technical amendment which clarifies the independence of the Governor of the Central Bank in the restricting of budgetary or funding or matters concerning the bank as well as the regulating authority. Its aim is to ensure the independence of the Governor is preserved in respect of his or her functions at a European level, as required under EU law. The amendment ensures the Governor has sole discretion in relation to budgetary and funding decisions which concern the bank as well as the regulatory authority.
Amendments Nos. 72 and 74 to 79, inclusive, are related and may be discussed together. Is that agreed? Agreed.
Government amendment No. 72:
In page 145, between line 36 and 37 to insert the following:
|1||Section 40(3)||Substitute "In this section and sections 42 and 42A," for "In this section and in section 42,".|
This is the amendment to ensure the provision in this Act mirrors the equivalent provision in the Planning and Development (Amendment) Bill 2009 which is being revised. The Bill, as approved by the Dáil, permitted a period of extension of planning permission from five to seven years in exceptional circumstances. The amendment reduces the maximum period of extension to five years. This will bring the period of the extension for planning permission into line with what it is intended to do generally on the enactment of the Planning and Development (Amendment) Bill 2009. The test for the granting of an extension is amended to reflect amendments proposed in the Planning and Development (Amendment) Bill. This incorporates an additional requirement so that the extension will be refused where changes in the development plan or development guidelines needing permission would not be granted were they applied for at a time the extension is sought.
The amendment further requires that in considering an application under the provision referred to, the planning authority will have regard to the guidelines issued by the Minister for the Environment, Heritage and Local Government. The amendment also clarifies that an application can be made by the agency before or after a previous planning permission has expired where the planning permission expires in the years 2009, 2010 or 2011. Persons other than NAMA will not be entitled to seek an extension after permission has expired. The differentiation is justified because in certain circumstances the agency might acquire property after the permission has expired and so will not be in a position to make an application for extension within the normal time limit.
I compliment the Minister on that section. It has been very carefully drafted to ensure the Bill going through the Seanad which might not come into law until next year will apply to NAMA. The Minister is making provisions to ensure that if permissions lapse, there is protection for the State. That is a very shrewd move in this regard.
A different approach could possibly have been taken, however. Local authorities have section 80 which differs slightly from the normal planning permission. It is up to the county councils to grant planning permission on different grounds. It is a fast-tracking approach, but as far as this Bill is concerned, this is a very shrewd move which protects the State's interests. It deals with both sides of the coin in terms of the current situation in which some of them will lapse between now and Christmas and may be extended for a period of time and in terms of the new Act under which they can apply to the local authority and get an extension in the normal manner. Well done.
I move amendment No. 73:
In page 145, line 41, to delete "shall" and insert "may".
This amendment relates to the issue we have just been discussing in part 8 of the Schedule to which the Minister referred. I understand and agree with the rationale for what is being proposed in the round. It may be, however, that I have not followed the Planning and Development (Amendment) Bill as closely as I ought and I undertake to rectify that but I am curious about the mandatory provision in respect of the planning authority that it "shall" extend the appropriate period. It appears to override the planning authority because it removes any discretion from the authority. We are entitled to be nervous if the authority's discretion is to be so bluntly overridden. There are very good reasons for the expiration of planning permission after five years. To say that the planning authority "shall" rather than "may" seems like a blunt instrument. I would appreciate further elucidation on the thinking behind this.
It is true that one is empowered to apply and the decision is taken on a set of criteria different from the original planning application, and to that extent NAMA has an element of entitlement to obtain the permission but it is not unrestricted. My amendment is in the same sense as the Labour Party's amendment to harmonise with the new legislation. The authority must be satisfied:
(I) there were considerations of a commercial, economic or technical nature beyond the control of the applicant which substantially militated against either the commencement of development or the carrying out of substantial works pursuant to the planning permission
(II) there have been no significant changes in the development objectives in the development plan or in regional development objectives in the regional planning guidelines for the area of the planning authority since the date of the permission such that the authority would not, as a result of those changes, grant an application for permission for the development as being in material contravention of the proper planning and sustainable development of the area of the authority".
There is a threshold that must be satisfied before the agency can obtain a planning permission under this provision.
(II) there have been no significant changes in the development objectives in the development plan or in regional development objectives in the regional planning guidelines for the area of the planning authority since the date of the permission such that the authority would not, as a result of those changes, grant an application for permission for the development as being in material contravention of the proper planning and sustainable development of the area of the authority,".
Amendments Nos. 80 to 93, inclusive, are related and can be discussed together by agreement. Is that agreed? Agreed.
Government amendment No. 80:
In page 153, between lines 20 and 21 to insert the following:
" 'development land-use' means residential, commercial or industrial uses or to a mixture of such uses;".
This relates to the windfall tax. A total of six amendments has been proposed on the definition of rezoning. For a word that is used commonly in political discourse it is extraordinarily difficult to give it an exact legal definition.
The amendments have been made to remove any possible doubt about what is encompassed by the definition of rezoning in the sections. The proposed changes in the definitions provide that a rezoning decision covers two different positions. First, a change in rezoning of land from agricultural open space, recreational or amenity use to residential, commercial or industrial use or any mixture of such uses, and second, rezoning changes within these development land uses of residential, commercial or industrial, including a mixture of such uses. It can cover changes from residential, commercial or industrial use or any mixture of such uses to agricultural, open space, recreational or amenity use but as can be appreciated such changes are unlikely to occur in reality.
The proposed changes to the definition of rezoning necessitated the inclusion of two new definitions to cover development and non-development land uses. Development land use covers residential, commercial or industrial, including a mixture of such uses where non-development land use includes agricultural, open space, recreational or amenity use. In the provision as originally published the definition of rezoning included these land uses and covered various types of change. The amendments will ensure that there is no doubt about what a rezoning is within the development land use concept.
There are also several drafting amendments included in the technical amendments. They correct typographical errors and inadvertent exclusions. It is also proposed to make a related amendment to the definition of a qualifying land for capital gains tax treatment purposes.
" 'rezoning' means a change in the zoning of land in a development plan or local area plan made or varied on or after 30 October 2009 under Part II of the Planning and Development Act 2000 from non-development land-uses to development land-uses or from one development land-use to another development land-use including a mixture of such uses.".
" 'rezoning' means a change in the zoning of land in a development plan or local area plan made or varied on or after 30 October 2009 under Part II of the Planning and Development Act 2000 from non-development land-uses to development land-uses or from one development land-use to another development land-use including a mixture of such uses.".
I was involved in drafting a development plan for Dublin when I was on Dublin City Council and became quite familiar with all the definitions of land use. One of the main definitions was institutional land. Within the Dublin City Council area there is a great deal of land so classed. This, however, is not mentioned in any of the Minister's definitions of land, particularly the non-development land. Is there a reason for that? Is the Minister happy that it is captured under the definitions?
I know there was considerable controversy within Dublin City Council on this subject and I do not want to enter into that controversy. I am not satisfied that institutional land use is a recognised legal land use category because the way land use is branded for legal categorical purposes is developed land, whether it is industrial, commercial, residential or for other uses such as agriculture. In legal terms "institutional" is not a use, because it could be applied for example to a residential or a commercial institution.
As far as I understand, it can be done but I do not want to be authoritative about it. The Minister for the Environment, Heritage and Local Government could give a better explanation. Whether this could be done without triggering a claim for compensation against a local authority would be an issue.