Vol. 756 No. 3
1Deputy Michael McGrath asked the Minister for Finance if he is satisfied that the pillar banks are genuinely meeting the targets for lending into the domestic economy; and his views that a more meaningful measure of the banks’ lending performance would be the amount of new credit actually drawn down as opposed to the amount of credit approved. [10182/12]
As indicated to the Deputy in a written reply yesterday, the Government has imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. These followed on the initiatives taken by the previous Minister for Finance who set up lending targets for the recapitalised banks.
I can confirm to the Deputy that both banks have reported to the Minister for Finance that they have achieved their targets for 2011. This information is currently being independently assessed by the Credit Review Office and will be dealt with in the report for the end of November 2011 which is due to be published shortly.
I accept that the amounts sanctioned by the banks are but one measure of the provision of credit. However, these amounts are within the control of the banks and are therefore an appropriate target for the banks. The targets are kept under constant review in the context of levels of economic activity.
Data are available from the Central Bank website on the actual drawdown of credit. This indicates that gross new lending to non-financial SMEs by credit institutions in Ireland was €2.3 billion for the first nine months of 2011. Figures are not yet available for quarter four of last year. Drawdown is also monitored by my officials and the Credit Review Office and are reported to the EMC.
Gross new lending details the amount of new credit facilities drawn down during the quarter by SME counterparties, that is, where this credit facility was not part of the outstanding amount of credit advanced at the end of the previous quarter. Gross new lending is defined in such a way as to exclude renegotiation or restructuring of existing loans. Gross new lending does not equate to loans sanctioned over the period.
Additional information not given on the floor of the House.
The recent independent Mazars survey of SME credit found that 17% of respondents whose requests for credit were approved did not, either wholly or in part, avail of the facilities. A higher proportion of new credit facilities had not been drawn down in comparison to renewed facilities. The most frequent reasons cited for not availing of approved credit continue to be "not needed at present time", which was cited by 80% of respondents. Given that the decision to draw down approved credit rests in the hands of the borrower, it would not be appropriate at this stage to impose targets for actual draw down on the banks. It remains an important factor to monitor.
I thank the Minister of State for his response. What we all want to see is new credit circulating in the economy. That is the reason I tabled this question. The real test is the amount of new credit that is drawn down. I take the Minister of State's point that the banks can only control the amount of credit they sanction but often sanctioning of new credit by the banks comes with such onerous terms and conditions that, in effect, it constitutes a refusal of credit and, in many cases, it is not a viable option for the customer to drawn it down. Other issues are the interest rate charged and the types of collateral requirements being imposed by the banks. Will the Minister of State re-examine this issue and as well as reporting the amount of credit that is sanctioned by the banks, will he report the amount of new credit which is drawn down? He partially answered a question when he referred to the amount of new gross credit of €2.3 billion in the first nine months of last year. That compares to the two pillar banks telling the Minister of State that they sanctioned €6 billion of new credit throughout the calendar year 2011. A much more meaningful measure is the amount of credit drawn down and put into circulation in the economy. I ask the Minister of State to re-examine that issue.
I agree with the Deputy that this is the key test of whether we can get the economy moving again, namely, getting credit out to SMEs in particular. The climate has been challenging given the recent difficulties in the economy. It is a chicken and egg situation. We need more applications to come forward and a better processing regime by the banks.
Some of the advances we have seen during the course of recent months are important and we have recognised that there is problem here for small businesses in particular, but it can be overcome. We now have a common application form across all of the banking sector and the Internet can be used to ensure that applications are made in the most technological advanced way possible. Also, the banks have been instructed to provide training, particularly for SMEs, and such training is important in drawing down the funds required.
This is an issue that the Government has taken very seriously, as the Deputy knows. The Economic Management Council meets on a regular basis with the banks. Yesterday Department of Finance officials had the banks in with them. The Deputy will be aware of the new revamped banking unit in the Department of Finance, which is involved in bilateral discussions with the banks on a weekly and monthly basis to make sure that we can get credit out there.
In the last quarter of last year, we saw some significant improvement in terms of sanctioning. It all very well to say to a small business that the credit is there for it but drawing it down is the key test. I agree fully with the Deputy on that. I reassure him and the House that this is a matter of absolute priority for the Government. Significant progress has been made and we will continue in that vein.
I thank the Minister of State for his reply. I am glad he acknowledged that the key test is the draw down of new credit by businesses in the country. I am concerned that we are still witnessing a situation of revolving credit where banks are bundling existing credit facilities such as overdrafts and company credit cards that businesses have, repackaging them as term loans and reporting them to the Government as new credit which they are not. They are recycled credit.
When this issue is being reported upon, I would like the Minister of State to note the figures from the Central Bank and compare the amount of new credit drawn down and put into circulation in the economy with what the banks tell him they have sanctioned. Only then can we get a real handle and picture of the amount of credit that is being put into circulation to allow existing businesses to continue and new investments to be created.
I welcome the Deputy's constructive remarks. This is a challenge particularly as we proceed through 2012. The Taoiseach has rightly pointed out that this is the year when the investment jobs agenda is the crucial test for us all to get people back to work. That will not happen unless we can provide funds into the real economy.
It is important to state also that the whole of Government is taking this issue very seriously. One of the issues we have identified is the need for equity in many of these businesses. Credit is one thing but the only way one will draw it down is if one has capital. Part of the problem is that micro-businesses in particular do not have access to the 10% or 20% required up-front to draw down the amount. That is something on which we are very focused, particularly the new micro-financing fund which was established by the Minister, Deputy Bruton, in consultation and in co-operation with the Department of Finance. The key test is to get the capital in place in order that these funds can be there for investment.
Many businesses in the middle of an economic turmoil spend much of their time deleveraging, writing off debt, paying down debt and not seeing investment. This climate will change when we ensure that lending gets out into the real economy.
The independent Mazars report, of which the Deputy will be aware, made the net point last year in terms of last year's lending that when the pending applications are excluded, the approval rate is about 70% at present. We need to get money out into the economy but we also need to have applications coming through. We also need to use the Credit Review Office as a means of making sure that money gets out into the economy.
2Deputy Pearse Doherty asked the Minister for Finance the position regarding the work of the Troika technical group dealing with the Anglo Irish Bank promissory note; if he will provide an update on his discussions with the ECB and EU partners on this matter; and his views on what would be a successful outcome on the matter of the promissory note. [10284/12]
As the Deputy is aware I have indicated that I am committed to reviewing the approach to the promissory notes with a view to reducing the overall cost to the State of correcting the banking system. The troika have agreed to engage in a process with Irish officials to produce a common paper which will consider options for re-engineering the notes in terms of the maturity of the notes, the interest rate, the cash flows and so on. Work is ongoing on this review.
The Deputy will appreciate that there are a number of parties involved in this process and it involves all the member states of the European Union and particularly the members of the eurozone. The Deputy will also appreciate that the situation in the eurozone remains unsettled and is changing on a daily basis. In these circumstances it would not be appropriate for me to comment in any detail about various options under consideration in advance of the conclusion of the considerations and the production of a common paper. Suffice to say that a broad range of options are under detailed consideration. Additional detail on the various proposals will be available when the ongoing work is further advanced.
In tandem with this technical review the Government has commenced a campaign at a political level to garner support for an approach which is more beneficial to the Irish State. The Minister for Finance and I met the Commissioner Mr. Rehn and Mr. Mario Draghi, president of the European Central Bank, as well as a number of counterparts from member states, to make progress on this matter. The Taoiseach has also met and discussed this issue with a number of European Council members. Unfortunately, I am not in a position to indicate when the review of options and negotiations will be completed. The Government is aware that payment of the promissory note is due at the end of March 2012. However, given the nature of advocacy and the decision-making process in the EU, I would not expect this matter to be concluded in the short term.
The Government is committed to achieving an outcome that not only serves Ireland's best interests but that is in the best interests of our external partners. It is of the view that the global and European economies and the financial markets will benefit from a speedy return to growth in the Irish economy.
I thank the Minister of State for his response. I am sure he is well aware that last week three expert economists - Professor Karl Whelan, Professor Brian Lucey, and Dr. Stephen Kinsella - appeared before the Joint Committee on Finance, Public Expenditure and Reform and made presentations on the promissory note issue. It would be fair to say that all three of them stated that what really needs to be dealt with is the capital of €31 billion. There was concern that the Government is focusing on either extending the maturities or obtaining a reduction in the interest rate, which, as Professor Whelan said in his presentation, is irrelevant in the long run because it will go back to the Central Bank and then it will go back to the State.
I heard what the Minister of State said about considering maturities, interest rates and so on. Is the capital part of that? I am not looking for any State secrets to be given away, but is the Irish State, as part of these discussions, seeking a write-down on the capital that is to be injected into Anglo Irish Bank? I know the Minister of State cannot say when the paper will be produced, but does he expect that it will not be produced before the payment on 31 March?
I thank the Deputy for that. On the latter issue, we have not set any specific timeframes. Something we wanted to see happen for quite some time was a joint approach by the ECB, the IMF and the European Commission. They are working on the paper, and the Minister for Finance has made it clear that when it is produced, the issue will be brought to the political arena. Given the difficulties we have all had to cope with at a European level, and now that the Greek issue has hopefully been resolved in the medium term, this and other issues will now come on the agenda and progress can be made. We do not have any specific timeframes, which is important.
On the issue of the capital and the interest, while we are considering all options, I do not think there is any indication in anything the Minister for Finance has said that we are looking for a significant write-down on the totality of the debt. What the Minister has said is that the key issue for the Government is to redesign the promissory note, either in terms of maturity or of the interest rate itself, because this has effectively become a sovereign debt by virtue of the fact that the bank was nationalised and the assets and liabilities guaranteed. We want to ensure the best possible outcome but, as we have said in the past, that will be achieved by agreement. We will not take some radical unilateral position on this.
It is disappointing to hear a Government member say again that the focus is on the interest rate and the maturity, because this will result, in the long term, in the same amount of money being transferred to Anglo Irish Bank from the State. I am sure the Minister is well aware of the papers that Professor Whelan, in particular, presented at the Joint Committee on Finance, Public Expenditure and Reform. Does he accept that a reduction in the interest rate on the promissory note - that is, the interest rate we are paying to Anglo Irish Bank - is irrelevant in the long term, although it is relevant in the short term in terms of our Government debt levels and our general Government deficit?
The whole payment is relevant to Ireland because, by making these payments, we are making our situation more difficult. However, the point we have stressed is that we are not seeking a specific write-down. We think this can be managed in a more productive way if we redesign the entire mechanism. Our approach before the election, during the election and on coming into office has been to renegotiate all these matters, making sure we do not take an action that jeopardises our position. Our approach last year to saving €10 billion on the interest rate on the bailout money over the course of the loans made a significant financial difference to the State. That was brought about by agreement and negotiation, and that is the same approach we are taking here. I accept that the approach taken by the previous Administration in putting this financial mechanism in place was difficult and it will make our position more difficult in terms of long-term sustainability, but the bigger issue is the need to obtain external funds for investment here and to buy Irish debt when we ultimately return to the markets. I do not think we can achieve that by saying we will impose a massive write-down on the debt. It would not engender confidence.
3Deputy Seamus Healy asked the Minister for Finance in view of the opinion given to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform in relation to the scheduled payment of €3.1 billion to Anglo Irish Bank, now IBRC, on 31 March 2012 (details supplied) if he will immediately inform the Central Bank of Ireland, the Troika and the European Central Bank that the scheduled payment will not be made. [10181/12]
This touches on the questions raised by Deputy Doherty. I very much welcome the constructive contribution from the economists on the question of the promissory notes, and I assure the Deputy that the presentations and remarks to the joint committee will be examined in detail. However, it would not at all be appropriate for me to unilaterally instruct the Central Bank and the troika that the scheduled payment will not be made at a time when we are engaged in a process to review options for a reduction in the overall burden to the State of restructuring our banking sector by varying the cost or timing, or both, of the repayment of that debt.
The Deputy will be aware that the Government made a commitment, along with all 27 member states, at the euro summit in October last year. For the information of the House I will put that commitment on the record:
As far as our general approach to private sector involvement in the euro area is concerned, we reiterate our decision taken on 21 July 2011 that Greece requires an exceptional and unique solution.
All other euro area Member States solemnly reaffirm their inflexible determination to honour fully their own individual sovereign signature and all their commitments to sustainable fiscal conditions and structural reforms. The euro area Heads of State or Government fully support this determination as the credibility of all their sovereign signatures is a decisive element for ensuring financial stability in the euro area as a whole.
The Irish Government will honour this commitment and will ensure that we work with our EU partners to address the overall cost to the State of resolving the difficulties in our banking sector, including the promissory notes.
Additional information not given on the floor of the House
Further, I am not convinced that in the event that it may be deemed advisable to make the promissory note payment due under the current schedule in March, it will weaken our position in the ongoing review. It is simply not my experience or that of the Government that this is how things work within the European Union or the eurozone. I remind the Deputy that our external partners are engaging in these discussions notwithstanding the fact that a payment of €3.06 billion was already made in March 2011.
While it would certainly be beneficial to have the matter of the promissory note payments resolved and agreed by the end of March, there is no guarantee that this will be achieved in that time frame. The Deputy will appreciate that there are a number of parties involved directly and indirectly in the process. He will also appreciate that the situation in the eurozone remains unsettled and is changing on a daily basis. In this environment, and given the nature of advocacy and the decision-making process in the EU, I do not expect this matter to be concluded quickly. However, I assure the Deputy that everything that can be done will be done to ensure a positive outcome for the State.
The payment of this promissory note is a major millstone around the necks of the Irish people and a major contributor towards austerity, affecting everybody across the board but particularly low-income and middle-income families. Professor Brian Lucey told the Joint Committee on Finance, Public Expenditure and Reform last week: "[O]nce we start paying under the present schedule it will be next to impossible to renegotiate that schedule or to get out from under it." Is it not true that we have a short window of opportunity between now and 31 March to address this issue on the basis of what Professor Lucey has said? If it is not addressed and solved before 31 March we will be forced into this situation for the long term and the austerity we have now will continue almost forever. The effect is that these promissory notes will cost us at least €47 billion, although other estimates go as far as €74 billion or even €85 billion. Is there not now a narrow window of opportunity to deal with this matter? If we do not deal with it before 31 March, will we not be in serious difficulty?
I am sure the Deputy is aware that we paid it last year, admittedly without the interest component, and the world did not change. While we are conscious of the difficulties this imposes on the State, the €3.1 billion was paid last year. People need to be aware of that fact.
We have taken an incremental approach to the negotiations with our external funders. Last year we managed to renegotiate the deal in the case of the minimum wage, the total cost of the bailout money, whether new loans should be sent to the National Asset Management Agency, NAMA, and, as was seen today, whether we could use the proceeds from the sale of State assets for the purposes of investment and job creation in the economy. It is the considered view of the Government that this incremental, step-by-step approach to solving our problems is far more useful than an approach based on shouting, roaring and screaming at the top of one's voice to try to impose things on others. This is an outstanding issue-----
The Greeks have done quite well with it.
I would not like to be in the position in which the Greeks find themselves right now.
Their private debt is lower than ours.
The Minister of State to continue, without interruption.
To answer Deputy Healy, this is an important issue for the Government and we are prioritising it. We have made some advances in how it will progress between now and the full schedule. Just because the Government is not talking about it daily does not mean it is not devoting all its efforts to getting the point across.
This is not a question of roaring, shouting or screaming. It is a practical and seriously difficult problem for the country, particularly for low and middle income families. Economic advisers have clearly said that if we continue to pay under this schedule, it will be impossible to renegotiate. I worry, too, about the reference to interest rates. As Deputy Doherty said, the economists have also indicated that dealing with the interest rate is effectively irrelevant in the long term. We must deal with the capital repayment and deal with it now. Surely it is time for us to stand up for ourselves and state we cannot and will not pay.
The Deputy might have the luxury of saying we cannot and will not pay, but he should be aware of the consequences. The country is being held together with emergency funding from the ECB. The cost of running the country which presents a real difficulty given the current deficit is also borne by the external support of these agencies.
I agree with the Deputy that the issue remains unresolved, but we are working hard to find a solution. We have seen the resolution of the Greek problem in the past 48 hours following the eurozone meeting. This might well give us the space and time to prioritise the issue and ensure our partners understand its significance. The Deputy should understand the troika has moved position in more recent times. It would be useful if it produced a joint position paper on the issue which would, at least, allow us to know the common position of the troika in whatever negotiations that would follow. However, I share the Deputy's frustration and anxiety to have something done about this. We are working on the issue.
4Deputy Michael McGrath asked the Minister for Finance the position regarding the recent initiative by the Revenue to ensure tax compliance among pensioners following on from the 150,000 letters issued by the Revenue in early January 2012; if he will confirm the number of the 150,000 pensioners that it is now believed have an extra tax liability; if he will confirm if the Budget day estimate of an extra €45 million revenue in 2012 from the initiative is still accurate; and if he will make a statement on the matter. [10183/12]
I refer the Deputy to the reply to Parliamentary Questions Nos. 81 to 83, inclusive, of 12 January 2012. It was never expected that 150,000 pensioners would have extra tax liabilities. In that reply I stated the Revenue Commissioners had advised me that in some cases the pensioners were paying too much, in others too little and that others would be exempt.
I am advised by the Revenue Commissioners that they have amended the records of those persons in receipt of Department of Social Protection pensions in 2012 with the most up-to-date information received from that Department. This ensures these taxpayers will pay the correct amount of tax this year on all their known income sources. In addition, the Revenue Commissioners advise that they have issued tax exemption certificates to the employer and pension providers of some 15,000 taxpayers whom they believe will be exempt from tax in 2012, even with the full Department of Social Protectin pension taken into account. Furthermore, the Revenue Commissioners state they will shortly automatically review the tax position of a further 20,000 taxpayers to ensure they did not overpay tax in 2011.
The Revenue Commissioners also advise that for the past number of weeks since taxpayers received the letters in question, they have been updating their records with information supplied on foot of direct contacts by the taxpayers where they, until now, did not have the most complete and up-to-date information available to them. Furthermore, at the meeting of the Joint Committee on Finance, Public Expenditure and Reform on 11 January the chairman of the Revenue Commissioners indicated that additional analysis had to be carried out and that work was still ongoing.
The Revenue Commissioners further advise that discussions with groups representing pensioners are ongoing and that they will be in a position to publish a number of additional "frequently asked questions" by the end of the week. Regarding the budget estimate of additional yield, I am advised by the Revenue Commissioners that the estimate of €45 million for additional liabilities due is still valid.
It was stated at the time the 150,000 letters were issued to pensioners by the Revenue Commissioners in early January that it was estimated 115,000 of the 150,000 pensioners would have an extra tax liability. I had hoped that by today the Revenue Commissioners would have given the Minister of State an up-to-date picture of the compliance initiative and where it stood for the pensioners concerned. Pensioners in my constituency have come to me with the letter they received. Many of them were told in the letter that they had an extra tax liability but on investigation it was clear to me that they certainly did not. That was subsequently confirmed on inquiry with the Revenue Commissioners. Many pensioners were unnecessarily frightened by the letter issued in early January. The information I am seeking - if it is not yet available, perhaps the Minister will indicate when it is likely to be available - is how many of the pensioners who received the letter will actually have an extra tax liability in 2012.
My officials advise me that a P35 contains the basic information given to the system by employers who each year inform the Revenue Commissioners and the social welfare system of the total amount of tax paid. We cannot give the Deputy the information because we do not have access to the P35s for 2012. Obviously, that information will come in. I understand the Revenue Commissioners will have some indicative figures in the coming months on the key question asked by the Deputy. However, it is not possible to give them because the P35s are not in. When they are, we will have more knowledge.
Contact has been made by the pensioners with the Revenue Commissioners to clarify their individual circumstances. As the chairman of the Revenue Commissioners advised the committee a number of weeks ago, thousands of pensioners have been in contact with the Revenue Commissioners by telephone and making inquiries at offices of the Revenue Commissioners. In many of these cases the information was provided, the position was clarified and it was confirmed that the pensioners concerned had no extra tax liability. We should be given information on the actual position as soon as possible. Some 20,000 pensioners were believed to be owed money by the Revenue Commissioners. Has this yet been processed? Many pensioners were advised that they should complete Form 12 in respect of their return in 2011, but that form is not yet available from the Revenue Commissioners. I hope that matter will be attended to without delay.
I thank the Deputy for bringing the latter issue to my attention. The information will be passed on immediately to the Revenue Commissioners to obtain a view on it.
The payment of back tax is an issue for the Revenue Commissioners. Last year the Minister brought legislation through the Oireachtas to ensure the Revenue Commissioners would be an independent, statutory organisation and not under the thumb or control of anybody. The Deputy is aware of this and not making that charge against the Minister for Finance. The Revenue Commissioners have already said stated the back tax issue will be examined on a case by case basis. The P35 form for 2011 was due to be filled in by a pension provider or employer on or before 15 February this year.
I am further advised that the first automatic review process will start before the end of March.
It is my understanding the Revenue Commissioners have taken the 115,000 cases on a phased basis. In a few months time we will be in a better position to give an accurate view of the total liability involved.
5Deputy Pearse Doherty asked the Minister for Finance if he accepts that the use of the effective interest rate methodology by the National Assets Management Agency in the Q3 of 2010 accounts rather than reporting interest actually received on performing loans, leads to an overstatement of their profits for that quarter and as a result provides a misleading picture to the general public of their operations during that time. [10285/12]
I assume that the Deputy is referring to the recently published third quarter 2011 accounts.
NAMA presents its financial statements in accordance with international financial reporting standards, IFRS. It is required to do so under EU legislation owing to the fact it has listed debt securities. In accordance with the IFRS, NAMA uses the effective interest rate, EIR, methodology for the recognition of interest income on its loan portfolio. The Comptroller and Auditor General has certified that the 2010 financial statements have been properly prepared in accordance with the IFRS and give a true and fair view.
NAMA accounts for the loans it has acquired by reference to the acquisition price from the financial institutions, not the original par value of the loans. NAMA acquired a distressed loan portfolio at a significant discount to the original par value using a collateral based valuation model which projected the expected property related cash flows and the expected receipts from the ultimate disposal of the underlying property collateral. A significant portion of the loans that NAMA acquired are not expected to perform in accordance with their contractual terms. As a result, NAMA expects that the most significant portion of the cash generated will be through the future disposal of the property collateral underlying the loans, not from the receipt of contractual interest.
Interest income is recognised on loans in accordance with the EIR method by reference to the expected property related cash flows on a proportionate basis over the life of the loans, rather than on a cash received or contracted interest basis, so as to accurately reflect the effective rate of return over the expected life of the loans. Thus the aim of the EIR methodology is to allocate interest income on NAMA's loan book proportionately over the life of a loan, regardless of the timing of cash receipts, ensuring performance is reported on a consistent basis between accounting periods.
Additional information not given on the floor of the House.
The Deputy suggested reporting interest actually received. However, NAMA advises that actual cash interest received is not an accurate reflection of performance because it does not reflect the fact that the return to NAMA is principally based on the sale of the underlying property. If actual cash interest received was used, income would be significantly understated in the period up until the disposal of the underlying property and overstated in the period when the disposal actually took place.
In accordance with the IFRS accounting standards, the effective interest rate is set on the acquisition of the loan. To the extent that subsequently there is a change in the timing or amount of NAMA's cash flow expectations, whether it be favourable or unfavourable, the IFRS requires that NAMA adjust the carrying value of the loan and recognise an impairment charge or gain in its income statement. This estimate of impairment is made on an annual basis. I understand NAMA is carrying out a detailed annual impairment review for the period to the end of 2011.
In the circumstances outlined, I do not consider that the use of the EIR methodology by the agency overstates its profits or gives a misleading picture of its operations. However, following comments made at the Committee of Public Accounts, NAMA has advised that it is examining with the Office of the Comptroller and Auditor General how it could enhance its disclosures on the movement in the original par value of NAMA's loans.
I find this bizarre. I have listened to the Minister of State's response in explaining how the EIR accounting practice works. In the first three quarters of 2011 NAMA reported an operational profit of €526 million. This is before impairment charges which are likely to wipe out that profit and result in NAMA having an operational loss are taken into account. We can all accept this. Let us forget about the impairment charges. Of the operational profit of €526 million NAMA states it made, it did not receive €249 million. It is booking interest on loans it has not received because it is using the EIR accountancy method. It may never receive this money. Does the Minister of State agree that, at a minimum, NAMA should report the actual amount in interest received on the loans during those quarters alongside what is projected in order that there would be a clearer and truer picture for the public?
NAMA is following an international model where a vehicle such as this purchases loans at a hugely discounted rate to reflect the fact that the assets have been totally impaired. This is in line with the international standard to which we have signed up. Furthermore, the Comptroller and Auditor General would not certify accounts if he considered there was something untoward about the accounting procedures involved. Is the Deputy suggesting we move to using new methodology? The immediate impact would be a radical increase in the administrative and legal charges associated with the management of the property portfolio. I am not suggesting the Deputy is arguing for this, but it would be the impact of what he is suggesting. That would not be a useful exercise at a time when we are all trying to minimise costs. There is nothing untoward in the way the information is reported, either in terms of our domestic procedures or international obligations. This vehicle which I call the NAMA ship as it leaves port uses existing legislation to reflect the fact that the assets were purchased at a discount.
The public wants to see what is going on within the ship of NAMA, a body which is costing €1 million a day to run. It wants to know the income it received in interest on loans. The report shows that €276 was received in the first quarter, but I have discovered that NAMA actually received only €178 million. In the second quarter it reported that it had received €255 million in interest, but it had actually received only €184 million. For the third quarter the corresponding figures were €255 million and €175 million. NAMA is still not subject to the Freedom of Information Acts which should be a matter of urgency for the Government. For a member of the public who is disposed to look at what NAMA is costing and the profit it is making, alongside the EIR figures which are guesstimates of what NAMA might receive some time in the future, there should be a record of what it actually receives in interest during the various quarters.
The Deputy has a fair point to make on the Freedom of Information Acts. I have heard similar comments being made by other Members of the House. This is something at which the Government is looking. We have given a commitment to amend the legislation. In that context, we will look at applying freedom of information legislation to NAMA, or parts of it. This would lead to the provision of useful information for all Deputies and the public.
Are we comparing apples and oranges? NAMA has purchased the assets at supremely discounted prices. The Deputy's question is whether this should be reflected in the actual value they once had or at their current market value. We can look at that aspect.
That is not the question.
We can look at whether additional reportage would make much difference. The discounted value reflects the fact that a significant portion of the loans NAMA acquired were not performing on acquisition and are not expected to perform in accordance with their contractual terms. This must be reflected in NAMA's accounting procedures. If the Comptroller and Auditor General had a difficulty with this or believed an unusual accountancy procedure was involved, this would have been reflected in the ongoing reports his office produces. We will keep the matter under review.
