The Keane report favours bankers over the ordinary person. This is hardly surprising considering the make-up of the group which put together the report — 17 officials from Departments, three Central Bank representatives, one AlB representative and one EBS representative. The fact that the Money Advice and Budgeting Service, MABS, was not consulted in any way says it all. The report refuses to accept that debt forgiveness must form the major part of the solution even though current mortgage costs are driving people over the edge.
How can the Minister for Finance be so cruel? Unfortunately, his past treatment of people who suffered from hepatitis C shows he has an obsession with protecting the State even if that means bulldozing the very citizens who make up that State.
There is an underlying problem in that there is a notion that people should not be allowed to avail of debt forgiveness because they do not deserve it. The thinking is that the people who are now in trouble are where they are because they were reckless or stupid in some way. Obviously, no group of people is entirely homogenous and some home buyers were indeed reckless. However, those people are a real minority. The rest, the vast majority, only bought a house to give shelter and comfort to themselves and their families. Some are of the opinion that these people must have been stupid not to know that house prices were unsustainable and would collapse. Who would have told them that? Was it, perhaps, The Irish Times or the Irish Independent? No, they were too busy baling money from their property pages to be able to see what was coming. The same can be said for local newspapers, many of which are now out of business because they were sold on to large media magnates which believed the revenue from their property pages was never going toend.
What about our politicians? The king himself, Bertie Ahern, certainly did not give any warnings to people. He did the opposite when he declared that anybody who said it would end in tears should commit suicide. The Opposition, now in government, certainly did not give any warnings. Its Deputies were so sure the boom would continue they insisted the Government should increase spending, a massive chunk of which would have had to come from building industry revenue. The truth is the State is at fault for leaving people with mortgages that are between two and a half and three and a half times above a sustainable level — at any time. The State caused this problem and therefore must rectify it.
Solving this problem should not mean destroying people's self-esteem. However, that is what the Keane report would bring about if it were put into practice. It would make people work all their lives in order to pay the equivalent of a mortgage without, in the end, owning the house. That is the best case scenario in some cases. If the housing market does not rise by an average of 2% during the next 30 years and if mortgage holders do not get pay rises not only will they have nothing after 30 years of payments but they will end up owing a small fortune. How can this be fair? Why are these people being punished for the crime of doing what they were encouraged to by the media and the powers that be? It should also be remembered that half the money that was taken out towards a mortgage came back to the State through various taxes and charges.
The principal reason for the high cost of mortgages was the actions — more properly, the inaction — of the State, the greatest of which was the failure to regulate the banks. Furthermore houses prices were driven yet higher by cartels dealing in building materials, helped by Government. The current Government has proved no better in dealing with such cartels. To date Irish-based companies sell concrete to Britain for 40% to 50% less than the price they charge in the Irish market.
We are told that the country cannot afford to provide debt forgiveness. The reality is we cannot afford not to provide debt forgiveness. Everybody knows the State has access to €9.7 billion for dealing with mortgage debt yet it refuses to use it. The Keane report states that writing off negative equity for all Irish mortgage debt will cost in the region of €14 billion. In a newspaper article Mr. Constantin Gurdgiev showed that this figure of €14 billion is not relevant in dealing with what matters most, namely, the problems of ordinary first-time buyers. He stated that if debt forgiveness were targeted at this group the cost would be closer to €6 billion to €8 billion. He also tackled the issue of so-called "reckless" people, suggesting that debt write-down should be done on the basis of average house prices in any given region. This would mean a person who built a mansion would not get as big a write-off, which might be called punishment. In such cases people might be left with some negative equity but the affordability of the mortgage would be greatly increased.
If the Government were to use between €6 billion and €8 billion to write off debt that would not be the ultimate cost to the State. People whose mortgages were seriously reduced would have money in their pockets to spend which would go back to the Government through taxes. As a result of this spending, employment would be stimulated and the State's social welfare bill would be reduced. People who were no longer in negative equity could sell their houses if they wished to move, for example, to take up a job opportunity. As things stand, mortgage holders are forced to stay where they are because they cannot sell their house. The recommendations in the Keane report would reinforce this problem rather than alleviate it. If the report is followed through it will make permanent a lack of mobility in the work force. This will cost the State money.
Lower mortgage payments would also result in people not needing or demanding as much for their labour. Jobs which are currently unattractive for reasons of remuneration would become far more feasible for people. People do not want a great deal of cash because one can get nothing with it. With debt relief people would be able to work for what counts as a normal wage in the rest of the developed world and that would increase our competitiveness. As things stand there are very few wage packets that reach the level required to pay off even an average mortgage.
One area relating to mortgage debt that is not taken into account, although we discussed it in the Private Members' motion, is the economic effect such debt has on people's mental and physical health. The current situation puts a massive strain on people. If this is allowed to fester they will be more likely to need our already stretched health services, thus costing the State more money, both directly and indirectly, through days missed at work. The Keane report states it is not possible to tell with any reasonable accuracy whether the 88% of mortgage holders who are paying their original mortgage can afford further hits. Obviously, it is not possible to find this out if one talks only to civil servants from the Department of Finance or the bankers who got us into trouble in the first place, in other words, the people who compiled this report. If they had engaged with an organisation such as MABS, or had looked at data from the Irish League of Credit Unions which has compiled a "what-is-left" disposable income tracker index, they would have concluded that people cannot absorb any further hits. In the latest ILCU study, 25% of those surveyed have a meagre €70 left after essential bills are paid. The introduction of the household tax next year will immediately bring that figure down to just over €60. The inevitability of increases in taxes in the budget will push people even closer to the edge. If further increases in energy bills over the coming year are thrown into the mix it becomes inevitable that the figure of 88%, namely, those still paying their original mortgage, will decrease significantly. Some experts say that by the end of next year, the figure could be as high as 20%.
Unfortunately, it appears that regardless of what is said in this House, the Minister is not for moving. It seems that those who showed ambition by providing homes for their families are to be pummelled and kicked about. At the same time, the Minister for Finance and the Taoiseach are watching on as Greece is about to secure a 50% reduction in some of its debts. Regardless of what the final figure is, it will dwarf the amount of money that would be required to reset Irish mortgages to a sustainable level, out of the mire of negative equity.
In the past, the Minister, Deputy Noonan, has urged people to talk to their banks and to come to an agreement. I have to say this is a good idea. The Minister should be taken up on it. The concept of safety of numbers should be applied when doing so. In other words, a massive group of mortgage holders should come together to renegotiate their debts. It is obvious that the banks are more likely to listen to 100,000 people who are looking for debt forgiveness than to the pleas of a solitary mortgage holder.
I think this can be done by means of a mortgage strike, which would be an act of solidarity. It would require the mortgage holders of Ireland to come together and assert themselves collectively. As I have said, there is strength in numbers. The Irish Congress of Trade Unions passed a motion at its congress calling for a mortgage strike. The motion asked mortgage holders to sign up to a specific website. The manner in which the mortgage strike has been designed by the Irish Congress of Trade Unions means that the strike will be triggered when 100,000 people have signed up to it. It is being done in that way to ensure individuals are not exposed to the immense clout that the banks enjoy in the courts and with our Government.
By acting collectively, the individual mortgage holder will become a new force in the whole bank versus citizen debate. The mortgage strike has two objectives — to repudiate the debt which rightly belongs with European banks and to reset all primary residential mortgages to a level that will release households from negative equity. The mortgage strike will give the Irish people a chance to do something about their situations. It is quite clear that politics has failed us. It is up to people to grab this chance. It is the only remaining option for the citizens of this country to put right the immoral and unsustainable debt that has been imposed on them.
The proposed mortgage strike would continue indefinitely until the European Central Bank agrees to allow all primary residential mortgages to be written down to a sustainable level and to take an equivalent amount of debt off the Irish national debt and onto its own books. The euro was a flawed design from the start. Irish citizens should not have to pay the price for this flaw. I am calling on the Irish Congress of Trade Unions to move ahead with the mortgage strike that their members ratified. If they believed in it strongly enough to ratify it, they should follow through on it.
