Leaders' Questions

The Tánaiste's comments, quoted in the media yesterday, about reducing taxes for the coping classes in the years ahead were very interesting. I am sure that was for an audience not here but in Killarney over the coming weekend.

The residential mortgage arrears and repossession statistics for quarter three reveal a damning indictment of the failure of everybody trying to deal with mortgage arrears. Almost 32,000 are now 720 days or more in arrears. While the Tánaiste is talking about commitments to reduce taxes on the coping classes in the years ahead, this cohort of people is now under huge stress and pressure. It seems nothing is being done for them. Recently, the Governor of the Central Bank said he was tearing the hair out of his head because of the banks' inability to deal with this issue. However, families are tearing the hair out of their heads because no proper restructuring offers are being made to them.

In reference to the 0.5% decrease in quarter three, which is the first decrease since 2009, the report states: "However, this decrease masks divergent trends between short-term and longer-term arrears." While we acknowledge the statistics with regard to the short term, the long-term arrears represent a massive problem that needs to be addressed. To date, the Government, the Central Bank and most importantly the banks themselves are failing to address that issue. They are now including threatening letters as a solution to mortgage arrears of 720 days or more.

We have previously called for independent oversight to assess what is a sustainable solution. I would be very concerned about a potential property bubble in some parts of Dublin coming to bear again and we will see banks move very quickly on these families for repossessions and sending threatening legal letters.

There continues to be a serious problem with mortgage arrears. The Government's plan for tackling that mortgage arrears problem is based on one important premise, which is keeping the roof over people's heads. Today's figures show that some progress is being made. The statistics show a decline in the overall stock of principal dwelling houses with mortgages in arrears relative to the figures for the end of June. This is the first decrease in the outstanding balance since the series began in September 2009. It shows that the Government strategy in tackling mortgage arrears is working and that banks are engaging proactively with their customers to find solutions.

In addition, early arrears declined significantly during the reporting period with a quarter-on-quarter fall of 6%. This appears to demonstrate some success by the lenders in addressing the accounts in early arrears and putting in place appropriate measures to prevent borrowers from going further into arrears. The number of principal dwelling house mortgage accounts, which are categorised as restructured at the end of September, now stands at 80,555, an increase of 1.5% when compared with the previous quarter. Consumers and lenders are agreeing permanent restructures for those in arrears or those who think they will fall into arrears. Engagement with banks and borrowers is crucial to securing sustainable mortgages.

The Government's continuing approach to tackling mortgage arrears is based on the Central Bank, which has now set clear targets for the banks to deal with distressed borrowers, requiring them to offer sustainable solutions by the end of next year with 50% to be done by the end of this year. The Central Bank is closely monitoring the banks' sustainable solutions and auditing their work regularly. We have radically overhauled the bankruptcy rules, reducing the period from 12 years to three years. That legislation will be commenced very shortly. We have introduced the mortgage-to-rent scheme with more than 1,000 cases being progressed and more than 100 families finding a solution. The Insolvency Service of Ireland has been established, providing a range of solutions to resolve debt problems. The Central Bank has issued a revised code of conduct on mortgage arrears, which ensures the resolution of each case in a fair, sustainable and transparent way. The Central Bank is working to find solutions for people with multiple-debt issues because in some cases it is not just the mortgage as other debts are involved.

I have also read the synopsis of the report and there are two key areas the Tánaiste has not mentioned. I repeat a sentence I already quoted: "However, this decrease [the 1.5% the Tánaiste mentioned] masks divergent trends between short-term and longer-term arrears." The report continues: "PDH mortgage accounts in arrears of over 90 days at end-September 2013 amounted to 99,189, an increase of 1,315 on the previous quarter." This means there is an increase in the number of people in mortgage arrears of 90 days or more. Within that cohort there are 31,843 residential mortgages in arrears of 720 days or more. This cohort cannot wait for the Tánaiste's hope to help the coping classes and have to be dealt with immediately. A threatening letter from a bank simply does not represent a solution.

A question, please.

Would the Tánaiste agree that threatening letters are not the way to address this cohort of people? There has to be meaningful engagement and a certain element of independent oversight. At the end of the day a bank's only interest is to protect its capital base - that is its obligation. Surely the Government and the Central Bank have an obligation to those people to have some independent oversight to assess what is a sustainable solution primarily for these 32,000 families whose mortgages are in arrears of two years or more.

I acknowledge there is a problem with people who have been in arrears for a very long time. It obviously follows that the longer it takes to resolve those arrears problems, the more they are to go into arrears. These are people who are now suffering the legacy that Deputy Kelleher and his colleagues left to them. We need to get sustainable solutions for those people who are in arrears. It will be done over a period of time on a case-by-case basis.

There is progress on the arrears. There have been 45,177 permanent mortgage restructures up to the end of September. The total number of mortgage accounts in arrears has fallen by 2,316. The number of mortgage accounts in arrears of 90 days or more has also fallen by 1,468. It has to be worked through. The strategy we have in place is one where the Central Bank has set targets for all of the banks and lending institutions to work with people in mortgage arrears. They will now be working within a legislative framework that strengthens the hand of the borrower. The introduction of the insolvency service and the new legislation reducing the period of time for bankruptcy from 12 years to three dramatically changes the balance between the borrower and the lender.

These will need to be worked out on a case-by-case basis. It will be a gradual process. Clearly, those in longer-term arrears are in a more difficult situation. Clearly, it will require a greater degree of effort and engagement for those arrears problems to be resolved. However, we are making progress on it. We want to see further progress made. I agree with the Deputy that the solution for anybody in mortgage distress is not to get a threatening letter.

That is the language.

The solution is for an engagement between the bank and the borrower so that a solution can be found as quickly as possible. That is the approach the Government supports and that the Central Bank requires banks to implement.

I hope the Tánaiste does not tell that to the delegates in Killarney. They would not be too happy about it.

Plans are going ahead to build three major projects on the national grid. These are at various stages but will provide 490 km of new power lines. That may be needed. The North-South interconnector has been delayed by seven years because 97% of landowners, 213 in total, are refusing EirGrid access to their land to do environmental impact studies. Grid Link, which covers the south east and Leinster, is meeting substantial opposition. The consultation period has been extended to January and we welcome that. Grid West is likely to go the same way. People are very concerned about long rows of pylons and their impact on farming, landscape, tourism, the devaluation of property and possible health implications.

In 2007, EirGrid claimed that putting cables underground was not technically feasible or reliable. Since the publication of the Government's independent expert report, however, EirGrid concedes that putting them underground is feasible and reliable. It is now a question of cost. In Denmark, new 400 KV cables are being put underground. EirGrid has the information on this. The recently completed East-West interconnector, 40 km of which is underground in this State and 30 km in Wales, cost €2.2 million per kilometre, almost the same as the estimate for the overhead lines, which was between €2.1 million and €2.3 million per kilometre. This does not include the losses due to delays. Chambers Ireland estimates that the delay in the North-South interconnector alone costs €30 million per annum. Over seven years that is €210 million if the estimate is accurate. Even if it is half right, that amounts to more than €100 million in losses on that project.

I want the Tánaiste to take into consideration the long-term costs. I told the Minister for Communications, Energy and Natural Resources last week that there are operational costs and we must consider the long-term costs. Look where short-term thinking got us in the past. The Tánaiste and his Government have rightly criticised that but I want them to think for the long term. If we put the cables underground, they will last longer. It will reduce transmission losses and disturbance to cables because they will not be affected by severe weather conditions. There will be lower maintenance costs and less damage to the landscape and environment and less visual impact. The Minister said last week in reply to me that he was open to carrying out a cost-benefit analysis on underground versus overhead. Will the Government commit and change policy to do that?

I blame the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte.

The Minister has extended the deadline for submissions on the pylons issue to 7 January. I encourage the Deputy to submit, as part of that process, the information he has given and the case he has made in the House. It is important the consultative process is full and all the information and cases that people have to make on this issue are made and considered.

There is another issue that we must consider for the long term. We all know that the extension of the electricity grid and the availability of energy and electricity supply are critical for the generation of employment and economic development, particularly in the regions. Some regions have experienced economic difficulties and difficulties in attracting investment and employment. It is critical there is an adequate energy supply to all the regions. In considering this issue, we must consider the long term. It is clear that EirGrid has an obligation, and the Minister has drawn attention to this, to operate, first, on the basis of consulting the public and listening to what they have to say on this issue; second, to comply with the planning processes in place: and third, to take the highest possible international standards for all the issues that must be considered, including environmental, and whether the cables should be under or overground. A study on whether cables should be under or overground was carried out in respect of the Meath-Tyrone project. The Deputy is aware of the outcome of that study. All these issues must be considered as part of the consultation process, which the Minister has extended to 7 January.

In 2007, EirGrid estimated that to put the cables underground would cost up to 25 times more than putting them underground, but by 2009, it had changed that to seven times the cost. The Minister, Deputy Rabbitte, said recently that it is imperative for State companies and developers of energy projects to have an early, transparent engagement with local communities and stakeholders. I welcome that statement. EirGrid management confirmed to our party, as late as yesterday, that the consultation process deals only with the issues of routes, corridors and direction, not underground versus overhead. This is a key flaw in the planning process. I welcome the Tánaiste's comments that he is willing to think about things in the long term. We have had enough problems in recent decades caused by short-term thinking and we are still tidying up after that.

There is a major flaw in the planning consultation programme process if it is not prepared to consider the issue of the viability and long-term cost of underground versus overhead. We want to deal with this properly because it involves billions of euro of taxpayers' money. Will the Government commit to having EirGrid correct this and ensure all options are considered as part of the consultation and planning process? The Tánaiste should send out that signal.

The Minister has extended the consultation period to 7 January and I encourage everybody who has an interest in the issue to make their case in advance of that deadline. Nobody should be constrained about what case they make. People who have an interest in this issue, whether public representatives or members of the public, people who are likely to be affected by it or who have an opinion on it, should make their case. I encourage them to do that.

The Deputy refers to costs and he has set out a range of figures. We have to be mindful that the cost is ultimately borne by the consumer so if there are additional costs associated with particular options, that cost will be reflected in the price of electricity to the domestic consumer and to businesses for which energy costs are a consideration when creating employment. I expect all these issues will be fully thrashed out and will be part of the consultation process that will take place up to 7 January.

A very important judgment was given in the High Court this week relating to the Credit Institutions (Financial Support) Act 2008. The then Labour Party spokesperson on finance, Deputy Joan Burton, said in a debate on that Act that: "One of the difficulties with giving the Minister a blank cheque is that it can invoke what economists and philosophers like to call the law of unintended consequences." No one debating and voting on the 2008 Act knew the size of the blank cheque or the scale of the unintended consequences. We certainly know them now. This legislation remains on the Statute Book and the extraordinary powers given to the Minister for Finance are still in place. Will the Tánaiste, as deputy leader of the Government, raise in Cabinet the need to review and amend, or better still, repeal this Act?

First, in regard to the promissory notes, which were the subject of the case taken by the Deputy to the High Court and on which High Court on Tuesday gave a judgment in favour of the State and ruled in favour of the State on all substantive grounds, the Government's approach has delivered results for Ireland. The reality is that the promissory notes have been part of Government debt since they were issued in 2010 by the previous Government. It was never, therefore, an option for the State to renege on those payments, as non-payment would be akin to a sovereign default.

It was back in 2011 - Frankfurt's way or Labour's way.

The agreement which was reached in February 2013 in regard to the promissory note debt represents the best possible outcome available for Ireland and has been acknowledged as such by numerous independent commentators. The agreement was the culmination of many months of political and technical negotiations with our partners and provides a significant benefit to Ireland by eliminating the annual promissory note payment, reducing the State's cash borrowing requirement by €20 billion in the next ten years. Any suggestion that we would cease making interest payments on this debt is akin to potential default and carries with it substantial threats to our reputation. The approach the Deputy is recommending would, I believe, undermine the 250,000 jobs directly and indirectly supported by foreign direct investment-----

Was it not Labour Party policy before the election?

-----would make it very difficult to borrow the funds required to finance vital public services such as social welfare, health and the education systems, would further increase the cost of credit in the economy and have significant implications for our exit from the bailout programme. On the other hand, we are now in a situation where we are exiting that programme, we have resolved the issue of the promissory note, we have liquidated Anglo Irish Bank - the IBRC, as it became - to which the promissory note was being paid, and, as we have seen this week, we are now creating in the region of 1,200 jobs per week. It is important that we do not put the progress we have made at risk.

That was a speech the Tánaiste should have given last night in the debate rather than sending in his junior Ministers to respond to the Technical Group's Private Members' motion. Again, in the role of Labour finance spokesperson in 2010 on the question of extending the timescale of the powers given under the Act, then Deputy Joan Burton, in briefing the Labour Party parliamentary party and urging a "No" vote, said: "Labour does not do blank cheques". Now, it is standing over a blank cheque. The question I asked was will the Tánaiste, as deputy leader of this Government, raise in Cabinet the need to review and amend or, better still, repeal this Act because it is giving a blank cheque to this and future Ministers to pay up to any limit to bail out banks and financial institutions. This is even when we now know the full, unintended consequences. Is this not another capitulation by Labour to Frankfurt?

I do not know where the Deputy is getting the idea of a blank cheque. The fact of the matter is that this Government-----

Is he suggesting this was not a blank cheque? They said it themselves in 2008.

There is nothing blank about it. It was very clear. It was predated cheques that were signed by the previous Government. They were predated cheques for €3.1 billion every year, to be paid in March, for a period of ten years. There was nothing blank-----


They continued to pay them. They honoured every one of them in full.

Find Deputy Micheál Martin.

Settle down, please.

There was nothing blank about them. What we had to do-----

They had to do another U-turn on their policies. Is that what they had to do?

Find Deputy Micheál Martin.

What we had to do was to renegotiate that-----

A Deputy

We had to clean up their mess.

I think they have woken up over there.

-----which we succeeded in doing in the early part of this year, saving the taxpayers of this country €20 billion in the process. I will not take, from Deputy Kelleher or anybody else, on the issue of the bailout-----

Deferring, not saving.

I have it here. The vote was taken on 20 November last, so we do not have to go back to 2010. Twenty-five Deputies, including Deputy Joan Collins and Deputy Billy Kelleher, voted against exiting the bailout.


Not me. Get your facts right.

Deputy Finian McGrath was clever enough - he voted the right way. He got it right.


Down there for dancing, Finian. Well done. However, the rest of them - the troika 25 who voted to keep us in the bailout - I am not taking any lectures from them this morning on economics, blank cheques or anything else.

It is Frankfurt's way then, is it?

The Tánaiste could not be right about that. They did not vote against leaving the bailout, did they?

They did. Not, Finian. Finian got it right, and Mick and Ming got it right, but the rest of them got it wrong.

I was away that day. I did not know that happened.

Finian was hitting Barry with the crutch.