Adjournment Debate

Banking Sector Regulation

Deputy Jim Daly

I wish to bring to the attention of the Minister the current situation that borrowers of term mortgages in the commercial sector are experiencing if they have some temporary difficulty in making the scheduled repayments set out when they originally availed of the facility. I have been made aware of a number of cases. The Minister will appreciate it is sensitive information and I will not disclose the specifics at this stage.

I am informed that the financial institutions concerned have no difficulty in converting capital and interest-type repayments to interest-only type but they are demanding large increases in the interest rate on the entire sum borrowed. To add further insult to injury, the by now almost fully State-owned banks are not only taking advantage of small businesses that are struggling to meet repayments in the challenging economic climate but are essentially defrauding the customers by charging the increased rate of interest on the entire sum of moneys borrowed and not on the amount of capital in question during the proposed capital repayment holiday of 12 to 24 months.

I believe that any person who is making a real effort and fighting to allow his or her business to survive over the next few years must receive a level of co-operation from his or her banks when the pressure is on him or her to make scheduled repayments that were agreed and negotiated in an entirely different economic environment.

This House will also recognise that every business person who is making a genuine effort is aware of the reckless lending that went on between banks and the borrowers, with some banks lending up to €2 billion to individuals to speculate on the property market. These same business people will also be aware that the institutions which carried out this type of reckless lending will most likely never see the return of either capital or interest on these larger accounts. Instead the Irish taxpayers, including every business person in the State and many more, will foot the bill for years to come.

To consider the subject of interest-only repayments on borrowings in general, I cannot see what difficulty the banks would have with any customers who are making a genuine effort and are in good communication with their bank to convert to interest-only repayments in the short term. After all, there is absolutely no loss of revenue to the bank. The only revenue the institution concerned will make from a particular account is the interest element of that account so, in essence, by deferring some of the capital for a prolonged period the bank will earn more interest on that account than it would by sticking to the original agreement.

At present, many people are so worried they cannot sleep at night, they cannot enjoy family life at home, and they cannot concentrate on making their business the success it used to be because the banks are their biggest nightmare and fear. I am aware that in many cases, computer-generated letters are the first thing to reach borrowers who find themselves in difficulty, which can be very intimidating and distracting to borrowers, even making them afraid of doing the right thing, which is to communicate with the bank. The banks need to review their methods of handling these situations and I firmly believe the House should have a role in introducing such legislation.

I respectfully ask the Minister to take on board my request to review the manner in which the two pillar banks in the State deal with persons requiring a move to interest-only payments for a period of time to allow for the drastic changes in economic circumstances which have befallen so many business people throughout the State. I do not accept that raising the interest rate for the duration of the holiday in capital repayments is just, moral or helpful in these times when we are all trying to reignite the engine of our economy. At a time when we as legislators proposed to ban upward-only rent reviews in the property sector, perhaps it is time the House also considered similar action to prevent the two State pillar banks from upward-only interest reviews for struggling businesses throughout Ireland.

Minister for Finance (Deputy Michael Noonan)

I thank Deputy Daly for his contribution. One of the difficulties in replying to the Adjournment debate is that one works from a prepared script and I had no previous sight of the Deputy's views. I will read out what I have and then comment on what he stated.

The Deputy will appreciate that a balance must be achieved by the Government between influencing the banks through the bank guarantee scheme and other financial support incentives, while at the same time staying out of the day to day running of these institutions. Banks must operate on a commercial basis. In recent years, Ireland had very low mortgage rates but now it is clear this era is coming to an end for both owner-occupiers and commercial mortgage holders.

The decisions financial institutions operating in Ireland make on the mortgage interest rates they charge to customers are commercial decisions for the institutions concerned. The Department of Finance has no direct function in an individual institution's decision on the matter. I understand the public anger when a financial institution increases its variable mortgage interest rates. Unfortunately these increases reflect market realities, including the cost of accessing funds.

As described by the Financial Regulator, Mr. Matthew Elderfield, when he appeared before the Joint Committee on Economic and Regulatory Affairs last year, part of the reason for low mortgage interest rates was that the banks' business models were fundamentally flawed. They were chasing unsustainable profits through risky property and development lending. These profits effectively subsidised aggressive campaigns for mortgage market share and unsustainably low interest rates. This business model is now being fundamentally recalibrated. Banks' costs of funding are significantly higher. Interest rate increases for borrowers are an unfortunate but inevitable consequence of these factors.

The State has a duty in this area to prioritise its efforts and resources to assist owner-occupier mortgage holders. Unfortunately the financial crisis has created conditions in which many home owners, through no fault of their own, now find themselves in arrears with their mortgage repayments and at risk of losing their homes. Through its agencies, the State is assisting mortgage holders in arrears in a measured and proportionate manner. I set out below some details of this assistance.

The mortgage interest supplement scheme, managed by the Department of Social Protection, provides assistance where the mortgage relates to a person's principal private residence. It supports approximately 18,500 mortgage holders. The Money Advice and Budgeting Service, MABS, provides a national, free, confidential and independent service operating from 53 offices nationwide. I understand that MABS devotes a substantial amount of its resources to dealing with client mortgage difficulties.

The report of the expert group on mortgage arrears and personal debt also made a series of recommendations designed to help as many people as possible save the family home. Many of these recommendations were implemented through the revised Central Bank code of conduct on mortgage arrears while the deferred interest scheme, or a variation of it, proposed by the expert group will be adopted in 2011 by lenders representing the majority of the market.

One of the main recommendations of the expert group was that a deferred interest scheme should be put in place. This was intended to allow borrowers, subject to certain criteria being satisfied, to pay at least 66% of their mortgage interest, but less than 100%. Payment of the balance may be deferred for up to five years. Mortgage lenders have been requested to commit to the scheme. Lenders representing the majority of the market have already indicated their willingness to implement the expert group's proposals for a deferred interest scheme or a variation of it, including AIB, AIB Mortgage Bank, Bank of Ireland, ICS Building Society, EBS, Haven Mortgages, Permanent TSB and Irish Nationwide Building Society.

Much of the material I am reading was already put on the record in response to the Private Members' debate. I listened carefully to Deputy Daly and I do not think my reply meets the case he made. If he provides me with a copy of his script I will raise it with the appropriate authorities to see whether something can be done. He spoke about commercial mortgages which are moving to an interest-only repayment scheme where the lending institution is doubling the interest rate and the extra tranche is being justified because capital repayments are not being made. This is a particular area that needs examination.

As I stated at the beginning, it is difficult to reply to an Adjournment debate in realistic terms because one does not know the case that will be made when the script is being drafted. I was very interested in what the Deputy stated and if he provides me with a copy of his script I will ensure the regulatory authorities get sight of it and see whether something can be done.

Pupil-Teacher Ratio

Deputy Aengus Ó Snodaigh

I hope the Minister will not have any difficulty in responding to this matter, which is with regard to a quite specific change which occurred under the Fianna Fáil and Green Party Government which changed the pupil-teacher ratio for gaelscoileanna and applied it retrospectively. Changing the pupil-teacher ratio would be a problem in itself, but by applying it retrospectively Gaelscoil Inse Chór and 30 other gaelscoileanna will lose a teacher this year. In all sense of justice and fair play I urge the Minister to row back on this decision for this year at least.

In September last year, gaelscoileanna like all other primary schools applied the rules as they stood. In most cases, they prevented children entering the school because they had reached the quota and did not want to overcrowd the classes. In the case of Gaelscoil Inse Chóir, it achieved what it thought was the required number to have a staff of nine teachers when the school term started. However, lo and behold in February it was told the criteria had been changed retrospectively. At that stage, children could not be enrolled because they had already enrolled elsewhere. If that were allowed by the Department it would address the problem.

Many of the children in Gaelscoil Inse Chór come from disadvantaged areas and it has been quite successful in promoting the Irish language in difficult circumstances. Tá líon beag páistí ag freastal ar an scoil agus tá siad tar éis iarracht a dhéanamh le tamall de bhlianta anuas cur leis an líon páistí. In ainneoin ciorraithe i mbuiséad na scoile agus scoileanna eile, déanadh iarracht mhór cur leis an scoil.

Le déanaí, in ainneoin gach rud a dúramar faoin Roinn Oideachais agus Scileanna, tá foirgneamh nua tógtha le ceithre seomra ranga nua. Osclófar roimh dheireadh na míosa seo é, ach ní úsáidfear ceann des na ranganna nua sin toisc nach bhfuil muinteoir uimhir a naoi á maoiniú, toisc an t-athrú a tharla i mbliana.

Bhí deis ag an Aire tarraingt siar ón chinneadh a rinne an Rialtas a chuaigh thart. Ní shábhálfaidh an cinneadh an oiread sin airgid, ach cuirfeadh sé leis an ualach ar pháistí atá ag freastail ar ghaelscoileanna, ach go háirithe, an Ghaeilge agus na hábhair atá á mhúineadh tré Ghaeilge a fhoghlaim in atmasféar ina bhfuil Béarla, don chuid is mó, lasmuigh den seomra ranga.

Tá ualach níos troime ar pháistí agus ar mhúinteoirí na nGaelscoileanna. Tugadh aitheantas thar na blianta don ualach sin agus dos na difríochtai sin. Sin an fáth go mbíodh an cóimheas idir mic léinn agus múinteoirí difriúil i nGaelscoileanna thar scoileanna eile. Dá mbeadh an cinneadh ag teacht i bhfeidhm an bhliain seo chugainn agus a fhios ag na scoileanna faoi, roimh Mhí Meán Fhómhair bheadh loighic éigin ann, in ainneoin go mbeinn i gcoinne an chinnidh. Ach tá sé go huile is go hiomlán mícheart na rialacha a athrú leath-shlí tríd an bhliain.

Impím ar an Aire athrú a dhéanamh ag an staid seo, le gur féidir leis an scoil, agus leis na scoileanna eile atá ins an riocht céanna, pleanáil cheart a dhéanamh don bhliain seo chugainn ionas nach mbeidh daltaí óga measctha istigh i ranganna atá ró-mhór agus le daltaí atá ar leibhéil difriúla.

Má tá an Rialtas ag triail teacht ar airgead, tá fliúrse airgid ar fáil sa cheantar, de réir cosúlachta. Tá a fhios seo agam mar tá páiste de mo chuid féin ag freastal ar Ghaelscoil Inse Chór. Le cúpla lá anuas, tá an OPW tar éis na mílte euro a chaitheamh ar fhéar a chur síos le go mheidh sé ann do bhanríon Shasana nuair a thiocfaidh sí.

Hundreds of square metres of grass have been rolled out in the avenue leading up to the school simply to welcome the British queen. The OPW seems to have no problem with finding money and perhaps if it has the funds to spare it can help the Department of Education and Skills to employ an additional teacher at the school next year. There will be no problem in future years because the school has a waiting list every year and it would have addressed the issue if it was given a fair opportunity to do so and if the new rule had not been applied retrospectively.

Minister of State at the Department of Communications, Energy and Natural Resources (Deputy Fergus O’Dowd)

Táim ag tógáil na díospóireachta seo ar son an Aire Oideachais agus Scileanna, an Teachta Ruairí Quinn, nach bhfuil sa Teach faoi láthair. Tá an freagra go léir i mBéarla.

Deputy Aengus Ó Snodaigh

Tá sin ceart go leor.

Deputy Fergus O’Dowd

Ach déanfaidh mé mo dhícheall cuid de a aistriú. D'iarr mé ar an Roinn script Ghaeilge a ullmhú ach i mBéarla atá sé.

Tá sé an-thábhachtach go bhfuil an cheist seo á plé agus molaim an Teachta as ucht an rud a dúirt sé. Beidh mé ag caint leis an Aire faoin méid a dúirt an Teachta agus neosfaidh mé dó na pointí nua nach raibh ar eolas agam go dtí seo ach go háirithe.

I ndiaidh bhuiséid 2011, tháinig athrú, ins na Gaelscoileanna ach go háirithe. Ó shin, tá an cóimheas idir daltaí agus múinteoirí cothrom, cuma más Gaelscoil nó scoil nach Gaelscoil atá ann. Tiocfaidh an riail seo i bhfeidhm ag tús na bliana acadúla seo chugainn, i Meán Fómhair 2011. Beidh líon na múinteoirí i nGaelscoil Inse Chór maraon le líon na múinteoirí i scoil nach Gaelscoil í. An fáth go bhfuil sé seo ag titim amach ná go bhfuil cúrsaí airgeadais go práinneach ar fad. Ní féidir leis an Rialtas dul siar ar an chinneadh atá déanta ag an Rialtas a chuaigh romhainn.

The Gaelscoil movement is well established. Is é an tuairim atá ag an Aire nach gcuirfidh an cinneadh seo isteach ar fhás na nGaelscoileanna. Sin tuairim láidir an Aire agus na Roinne. The change in the staffing schedule will result in an overall reduction, of the order of 50 posts in Gaelscoileanna. Faoi láthair, tá níos mó ná 1,500 múinteoir ag obair ins na scoileanna seo. The actual impact at individual school level, including Gaelscoil Inse Chór, is determined as part of the allocation process for 2011-12 and schools are being notified in the normal manner.

This case has been raised with my Department by Deputies Eric Byrne, Michael Conaghan and Catherine Byrne. They have been invited to submit an appeal to the primary staffing appeals board, which operates independently of the Department. The appeals board is next scheduled to meet towards the end of May and the school will receive notification of its decision shortly afterwards.

The Government will endeavour to protect front line education services as best as possible. However, this must be done within the context of bringing overall public expenditure back in line with what we can afford. All areas of Government spending, including gaelscoileanna, will have to manage on a reduced level of resources. The challenge will be to ensure that the resources provided are used to maximum effect to achieve the best possible outcome for pupils.

Register of Electors

Deputy Joe McHugh

I raise this matter in the aftermath of the recent election and on foot of the experience of previous elections whereby people who were on the electoral register for years discovered that through no fault of their own they did not have a vote on election day. This is a serious matter which requires us to consider the recommendations of the Joint Committee on the Constitution in regard to electoral reform. One of its recommendations was to consider the possibility of linking PPS numbers with the electoral register.

A small minority of people are abusing the right to vote and are bringing the electoral process into disrepute. It is a mark of a healthy democracy that a person can place himself or herself on the electoral register with ease. Practices that undermine politics and electoral processes are unhelpful in a society where cynicism and disaffection with politics are on the increase. The electoral register allows individuals' names to appear in more than one register, which gives them the opportunity to vote several times in the same or different polling stations. The current system also allows people with addresses in this State but domiciled in other jurisdictions to be registered. In an age of technology, this is unacceptable.

We need a proper debate on this matter because the way in which we do politics has changed. The various party political machines kept a close vigilance on electoral registers but that may no longer be the case. The breakdown in community networks means that people do not necessarily recognise voters as they arrive in polling stations. One way to address this is through the PPS number. I appreciate that complications will arise with regard to using this. People may see it as an invasion of privacy or find a barrier to the idea, but it must be seen as a practical solution.

The problem is not universal. Many registers are in fine shape. Nevertheless, when we examine voting numbers, we see turnouts of 69%, 70% or 75%. These are not accurate figures because registers may include duplications or names of people who no longer live at the address on the register. At a time when there is considerable cynicism towards and distrust of politics, people look at a turnout figure of 55% or 65% and wonder what happened the other 40%. Turnout figures are often misrepresentations.

I am calling for this matter to be examined. The recommendations of the joint committee should be considered and a debate begun. Many people on both sides of the House want to ensure we have an up-to-date electoral register. We should look at the possibility of having a central register. At present registers are under the auspices of 34 local authorities. A marked register is being compiled centrally. Each of the 34 local authorities has sent their marked registers to Leinster House to be checked. This is an anomaly. The updating of electoral registers could be done centrally, from start to finish.

Deputy Fergus O’Dowd

I thank the Deputy for raising this issue. I speak and reply on behalf of my colleague, the Minister for the Environment, Community and Local Government, Deputy Phil Hogan.

In law, the preparation of the register of electors is a matter for each local authority. It is its duty to ensure, as far as possible and with the co-operation of the public, the accuracy and comprehensiveness of the register.

Local authorities have undertaken extensive voter registration campaigns in recent years, with assistance from the Department of the Environment, Community and Local Government, to ensure the electoral register is as up to date and as accurate as possible. This involves striving to ensure, on the one hand, that everyone entitled to be on the register is registered and, on the other, having appropriate measures in place to counteract any possible abuses. Electoral law reflects this balance to be achieved between an accessible registration system and potential abuse. It also provides for significant measures relating to voter identification and the prevention of personation aimed at the prevention of fraud.

I agree with the issues raised by Deputy McHugh. There are much bigger changes of population in urban areas than in traditional rural areas. Rural registers tend to be more accurate than urban ones. Nowadays, people often do not answer the door when someone knocks. It is difficult to communicate or to get into gated dwellings. There are major issues to be examined. An Post should be consulted or even asked to compile the register. An Post delivers letters and its staff know where everyone lives. Local authorities are no longer in that business and do not have the same local knowledge.

The Minister, Deputy Hogan, has acknowledged that further improvements can be made. The use of PPS numbers is one of these initiatives. While the PPS number or any other unique identifier could assist registration authorities in ensuring the register of electors is as accurate as possible, there are a number of issues that arise, which would require careful consideration. For example, it is unlikely that the existing PPS database could populate the electoral register with PPS numbers because of the lack of matching identifiers between the two databases. Therefore, a specific national canvass would likely be required with the associated resource implications. Privacy and data protection issues may also arise. There may be a reluctance by people to give their PPS number for registration purposes. Finally, the PPS system does not necessarily capture the current residence of voters or their citizenship, both essential for electoral registration purposes.

It will be understood, therefore, that there are no quick and easy solutions to the perceived problem. The register is important and needs careful consideration. The importance of engagement by voters who have a responsibility to ensure they are on the register also needs to be emphasised.

The programme for Government contains a commitment to establish an electoral commission to subsume functions of existing bodies and the Department of the Environment, Community and Local Government. An electoral commission will be an important element in a reformed and revitalised electoral system and the Minister is considering how the necessary measures to establish such a commission can be advanced, including its structure and functions. The Minister will, in that context, consider the issue raised and I will bring to his attention the points raised by Deputy McHugh.

Road Network

Deputy Colm Keaveney

The construction, improvement and maintenance of individual national roads, including the N18-N17 Gort to Tuam public private partnership scheme, are matters for the National Roads Authority under the Roads Acts 1993 and 2007 in conjunction with the local authorities affected. I understand the allocation of funding and the delegation of powers relating to the construction and maintenance of national roads is a matter for the NRA under section 19 of the Roads Act.

Despite that situation, I had the privilege of meeting the new Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, in the recent past regarding concerns at unhelpful commentary in the national media about the future viability of the Gort to Tuam bypass. I welcome the prompt action of the Minister whose office facilitated me with an up-to-date position on the project as a consequence of our discussions. The Minister has afforded considerable time and understanding to my concerns at the work-in-progress issues regarding the Tuam to Gort project. I acknowledge the Minister's capacity to identify with the concerns I shared with his Department and the concerns of the people of Galway and of the west. We welcome his support for investment in the Atlantic corridor which is critical to my region.

The Gort to Tuam scheme is being tendered by the National Roads Authority as a PPP. As such, we are reliant on private sector funding for the construction and for its operation. The contract for this critical infrastructure should have been awarded in 2010 and the construction should be under way as we speak. As a consequence of developments in the financial markets relating to the bank crisis and the need to establish the EU-IMF relationship regarding the nation's funding, however, the market perception of Irish sovereign risk has given rise to concerns on the part of the private investor. I hope next Monday's special sitting of the Dáil will go some way towards engendering confidence on the part of those investors that we are good players within Europe.

This project must progress at the earliest opportunity. The strategic importance of this section of the north-south corridor will be significant in laying the foundation for the economic recovery of the region. The sustainability and competitiveness of more than 400 firms that provide thousands of much needed jobs in the west and mid-west are highly dependent on this critical capital investment. It needs to take place without delay.

The programme for Government states that our economic recovery must be export-led. The west, Galway in particular, needs to have connectivity to its international markets to attract foreign direct investment and to retain the multinational employer base we currently enjoy. I need not further impress on the Minister the economic significance to the region of the Tuam to Gort bypass project and the positive impact this infrastructure would have on sustainable spatial planning.

I call on the Minister to keep the House updated on developments surrounding the progress of the funding aspects of the Gort to Tuam bypass and, in particular, to share any progress on the project with the county and city managers of Galway. In the very unlikely event of this much needed bypass being further delayed beyond any acceptable period, I would be grateful if the Minister would instruct the National Roads Authority to have in place an immediate plan to proceed with a bypass at Tuam as a stand-alone project.

Minister for Transport, Tourism and Sport (Deputy Leo Varadkar)

At the outset I should clarify that as Minister for Transport I have responsibility for overall policy and funding in regard to the national roads programme. However, the planning, design and implementation of individual national road projects are matters for the National Roads Authority under the Roads Acts 1993 to 2007 in conjunction with the local authorities concerned. Noting this I have referred the issue raised by the Deputy to the NRA for direct reply. I would ask the Deputy to advise my office if he does not receive a direct reply within ten days.

With regard to the specific project, the House may wish to note that the N17-N18 Gort to Tuam project is being tendered by the NRA as a public private partnership, PPP, but due to concern in the capital markets regarding Ireland's overall financial situation the NRA has had difficulty concluding this PPP contract.

The successful awarding of a major PPP contract involving private funding is challenging at any time but is particularly challenging in current circumstances where Ireland has been the subject of intervention by the IMF and the European Union. Until financial credibility is restored the international debt funding market will be reluctant to lend funds to finance projects in Ireland, the repayment of which is ultimately dependent on the Irish State.

This project remains a priority for the Government and the Government is committed to this PPP. The NRA has my full support in seeking to get the project to a financial close this year. I can undertake to keep the Deputy and other Deputies for the region informed of progress as it is made, and also the county and city managers. The NRA and my Department have not given up on this PPP and intend to pursue it for as long as we can.

Should the project not become possible I would agree with the Deputy's suggestion that an alternative arrangement should be made to proceed with part of the project on a traditional Exchequer funding basis but I want to make it clear that we are still trying to get this PPP over the line.

The Dáil adjourned at 9.25 p.m. until 10.30 a.m. on Thursday, 5 May 2011.

Dáil Éireann debate - Wednesday, 4 May 2011