Amendment No. 1 in the names of Senators Alex White, McCarthy, Ryan, Prendergast, Bacik and Hannigan proposes the insertion of a new section. Amendments Nos. 1, 2, 31, 37, 38, 52 and 64 are related and can be discussed together by agreement. Is that agreed? Agreed.
National Asset Management Agency Bill 2009: Committee Stage.
Section 1 agreed to.
NEW SECTIONS.
I move amendment No. 1:
In page 16, before section 2, to insert the following new section:
2.—(1) For the purposes of this Act, "the Oversight Committee" shall mean a committee of the Houses of the Oireachtas, or a sub-committee thereof so enjoined and appointed by a Resolution of the Houses, consisting of specified persons not being members of the Houses of the Oireachtas to report to the Houses of the Oireachtas every 30 days on the operation of this Act and the activities of NAMA.
(2) The Minister, NAMA, and any other body or person having functions under this Act shall be required to co-operate with the Oversight Committee in the performance of its functions.
When we view what has occurred in the past year or year and a half, one of the recurring themes of much of the commentary and certainly what people will say to one when they sit down and analyse what has happened and how we got to this position with the banks and the financial institutions is the question of whether anybody could see what was happening. We make this point frequently with the Minister that there was a lack of sufficient, or any visible, oversight or monitoring of, for example, the lending policies and strategies of the main financial institutions. No doubt we will continue that political debate and in my view there will be a political reckoning which will visit the Government in due course when the people get an opportunity to decide on that issue. I do not want to deal with that precise issue at present.
In the context of this amendment I want to see if we can look to the future. It looks inevitable that the NAMA legislation will be passed this week by the Houses. I am interested, as I am sure the Minister and all of us are, in going some short way towards trying to ensure that there is a serious measure of public knowledge, information and transparency in the operation of the institutions that we are about to put in place. All of the points on how momentous this is and what considerable financial exposure it will entail in future for taxpayers and for the community, can be made again for effect. We can make all of those points, but I will take those as read. I ask the Minister to agree it is highly desirable that institutions and mechanisms should be put in place to ensure a significantly heightened level of public information and knowledge of what is being done in our name in the context of NAMA.
The people are entitled to measures which, with respect to the Minister, I do not see in the legislation, which will go some way towards ensuring that there is no repeat of people's sense, not just that things went wrong, but that persons who were supposed to oversee and monitor matters were not doing what they were expected to do.
It is not enough for the Government to say, "Trust us, this will be done efficiently, in a proper manner and in the interests of the public and of the taxpayer." While I do not doubt that would be the motivation of the Government, it is no longer any use for Governments of any political persuasion to state, "Trust us, we are the Government." That just will not wash. No matter how beyond criticism they may be, it is not a reflection on the probity or otherwise of any individual Minister or Government to state that it is necessary and essential that there should be institutions and mechanisms in place so that the public can see what is happening.
There was an attempt to criticise this amendment, not by the Minister, by characterising it as proposing that every time NAMA opens a file, looks at a position on a particular site and makes an evaluation of an asset, the Minister would immediately press a button and put that information directly onto a website. Everybody understands the realities of what needs to be done and the detail of the work that must be engaged in.
While that is one end of the spectrum, the other end of it is a concern I would have that there would be no information available to the public as it is happening. I am not suggesting that each file should be put up on the website. I am suggesting that over a period of time — whatever is appropriate in terms of weeks or months — there should be an opportunity for the public to be served in this way by a mechanism or a reliable body or committee. I am not stuck on the particular proposal of my party for an oversight committee, but it should be something of that nature.
I appreciate the point the Minister made in the other House. One needs to differentiate between accountability and the slightly softer idea of transparency and the communication of information. They are related but are not necessarily the same. The Fine Gael amendment, amendment No. 2, which is a sensible one, deals with the question of an Oireachtas committee on NAMA. It is a reasonable attempt to set out the basis for a committee that would work within these Houses, and I support it.
However, with my party's amendment I am looking for something perhaps less onerous in some ways in terms of the kinds of institutional supports that it would need, but a means by which there can be an interlocutor between the public and what is happening in NAMA.
It seems to me that a body such as an oversight committee has certainly worked well in other countries, particularly the US, where persons who have an expertise and a knowledge, and who are not necessarily politically aligned but who have a credibility in the eyes of the public, would be in a position to query, examine, scrutinise and, most important of all, communicate information to the public by means of all of the different new available methods of communication and broadcasting.
I suppose it is one more attempt to try to avoid us being ever in the same position again where people are not only horrified at what has happened but appalled that it would appear nobody was examining or scrutinising what was occurring.
One requires oversight at all times, not only when there is a problem. There is a sense that such committees are tedious and go through the motions, but it is important in any democracy that there should be a group of people dedicated to examining and communicating the nuts and bolts of something as important as an institution such as NAMA. The amendment, in that context, should commend itself to the Minister.
When one looks back at the history of the crash of 1929 which went into the 1930s in the United States, for example, the striking aspect is the level of scrutiny that was engaged in at that time, 70 years ago. In fact, during that period there was a position taken, even by the political establishment in the United States, that if one was to persuade the public to "buy-in", to use that awful phrase, to steps one wanted to take for the future with which people were particularly enamoured, one needed people to have a means by which they could see and understand what had happened to bring them to the position in which they were. Colm McCarthy has made the point somewhat critically of the Government. I do not know if the Government ever responded to him on that specific point, namely, that he felt that in the context of the measures his committee was proposing, he thought it essential that there should be some quick means of having an examination into what happened in the Irish banking system in the past ten years. He seems to be as horrified as everybody else at what occurred, and he seems to believe that in order to gain any kind of democratic support or confidence among the public for the harsh measures he is proposing — undoubtedly, harsh measures will be taken, whether his or variations of them — people need to have an understanding of what has occurred, and they need to have information. They should not just repeatedly hear the point: "We are the Government, trust us and we will make sure it will never happen again." The problem is that people just do not buy that.
The Taoiseach has used a particular phrase in recent days in answer to questions on the NAMA strategy, or perhaps it was said on his behalf. He said that we are putting NAMA in place and it is the strategy we have chosen on the basis of "the best advice available to us". It is a phrase the Taoiseach often uses, in particular when he is put under pressure in regard to what has happened to the economy more broadly. I believe he said it again on Sunday when he spoke about the mistakes made in the past ten years. However, while he says we took all the actions we took on the basis of the best economic advice available to us, people just do not buy that explanation any more.
Whether it is even true or false is not the point. Senator Boyle and the Minister, Deputy Gormley, have made the same point that there is a real and serious problem of public confidence in the Government and, sadly for the Minister, in the people who many of the public believe are at least partially responsible for bringing us to where we are. That is why we need these interlocutor-type mechanisms or institutions that people can have confidence in and rely on.
Perhaps a reasonable example to proffer to the Minister as to how it worked or might work was in regard to the Referendum Commission which oversaw the second Lisbon referendum, which occurs to me as I speak, though it may not be the best example. Many people said to me in the course of that debate that they felt Mr. Justice Clarke in his radio appearances impressed them due to his absolute clarity but also due to his fairness and sense of balance. He was not somebody who sounded as if he had an agenda. That would not be his job, of course, but he came across as a genuine representative of the public and one who could navigate the problem.
Very often two people on opposite sides of an argument invoke the same facts in support of their arguments — one could take the example of nationalisation versus NAMA. The Minister yesterday said that nationalisation would not deal with the credit flow issue. I turn to the Minister and say that NAMA does not deal with the credit flow issue. They are both suggestions as to how to cope with the banking crisis, as a consequence of which it would be intended and hoped that credit would start to flow, but one cannot make the claim that NAMA will guarantee credit flow any more than one can make the claim that nationalisation would, or vice versa, because there are so many uncertainties.
The Minister is reading something else; therefore, he cannot be expected to——
I am listening to the Senator; therefore, he need not worry. I am hanging on his every word.
I am not criticising the Minister for that as he was reading the Bill. I merely suggest that if he did not follow that particular point, it might have been because his mind was on something else.
The issue is this. We cannot always expect people, particularly in this modern era, to simply believe Ministers when they say "Trust us."
Like all legislation, this boils down to politics, economics and the legislation itself. I read somewhere that the Title of this Bill is structured in such a way that it deals with this issue as if it is some sort of national emergency and, therefore, the Minister can take very strong powers upon himself because of the pressing need for the economy to have this legislation.
It is a national emergency.
I am not disputing that. I am simply stating that is the way I am reading it.
That is fine. I am just seeking clarification. It seems like a national emergency to me.
The Senator is getting support that it is definitely a national emergency. When I asked the Minister on Second Stage whether this Bill would be referred to the Supreme Court to test its constitutionality, he replied that he felt there was no need for that. He did not return to the issue when he responded on Second Stage, which I did not really expect him to, as almost every Senator in the House contributed to the debate. However, if we are not going to refer this Bill to test its constitutionality, and even if we do, there is also a need for a very strong committee of this House to follow what is happening in NAMA and to review every aspect of this legislation. What we seek in amendment No. 2 is that the Oireachtas would appoint the board of NAMA, oversee it, approve its codes of practice and be very deeply involved in how it works.
There is an up-front cost of at least €54 billion to the taxpayer. As we also mentioned on Second Stage, although the Minister did not get the opportunity to respond, we will probably recapitalise the major banks of this country again next year. We have already spent in excess of €10 billion this year on recapitalising the banks and next year that figure must be at least another €10 billion, if not substantially more. We are talking about huge amounts of taxpayers' money. There should be a very strong oversight for the taxpayer through the Houses of the Oireachtas and we should not leave all the power in the Minister's hands, which seems to be the case at this time.
Amendment No. 37 seeks to help the Minister in appointing a first board but, again, the amendment looks for strong Oireachtas oversight. Amendment No. 31 seeks a more cohesive business plan in the first instance, before the Minister enacts this legislation and gets NAMA operational. The draft business plan as it stands has a certain amount of detail but could give more clarity to the people as to what they are actually buying and what we are voting for.
These are the reasons I would seek to press amendment No. 2, on which I will call a vote if necessary. The background is that constitutional issues arise in this regard. Incredible power is being given to the Minister in this legislation. There are significant costs to the taxpayer, including the €54 billion, plus the recapitalisation cost of approximately €10 billion to €15 billion. When one reads through this legislation, many things are happening that require strong oversight by the Oireachtas. I would like the Oireachtas to be given the power to oversee NAMA.
When the people looking in from the outside talk about NAMA, the economy and banking, they remember Mr. Fitzpatrick and the golden circle of ten people who received loans of up to €300 million from Anglo Irish Bank. Even to this day, we have no idea who those individuals are, what was the basis for them getting these massive loans and whether they are going to repay the loans. That is something that sticks in the minds of the people when they listen to discussion of banking, bailouts and the supports we are giving the banks at this time. This is why the Minister should support our amendment.
I support Senator Alex White and this group of amendments. The Fine Gael amendments are similar to the Labour Party amendments in this grouping in that all of them seek to offer a measure of scrutiny and oversight, as Senators White and Twomey said. There is also an important aspect to the Labour Party's amendment No. 1 in that, in addition, it provides for review of the legislation. I will deal with that amendment first, as I note that review of NAMA is provided for in Part 14 of the Bill, but it is a very minimal review at present. Section 223 states:
(1) As soon as may be after 31 December 2012, and every 3 years after that while NAMA continues in existence, the Comptroller and Auditor General shall assess the extent to which NAMA has made progress toward achieving its overall objectives.
(2) The Comptroller and Auditor General shall present a copy of that report to the Minister as soon as may be and the Minister shall cause a copy of the report to be laid before each House of the Oireachtas.
That review will take place every three years after 2012, and section 224 has an additional provision for review by the Minister every five years. That seems to be an insufficient amount of review. One of the merits of amendment No. 1 is that it requires not only the appointment of an oversight committee within the Houses, but a review of the operation of NAMA every 30 days. Given the significance of NAMA, I would have thought that the review provided for in Part 14 is insufficient. The amendment proposes a higher level of review as well as scrutiny by an Oireachtas committee. Whether it is the Labour Party oversight committee or the Fine Gael Oireachtas committee on NAMA, the principle is the same. There must be scrutiny and there must be accountability through the Houses of the Oireachtas.
Studies carried out on the operation of asset management agencies elsewhere have shown the need for such agencies to be kept under close review and to operate in a transparent manner. This is not about the minutiae of running NAMA. Clearly that is not something in which an Oireachtas committee should intervene, but it is about ensuring that NAMA acts in such a way as to facilitate the public interest. Given that NAMA is the Government's chosen mechanism, we want it to be effective and we want it to allow the banks to free up the flow of capital, to free up the flow of credit to individuals and small businesses.
Last night, with others on the Labour Party benches, I argued for the temporary nationalisation model, and I am glad the Minister addressed that in some detail. I felt his preference for the NAMA model over nationalisation could be summed up by saying that it would look bad internationally if we went for full nationalisation. That seems to be the core reason for choosing this NAMA model over the temporary nationalisation model. We all understand the need to increase consumer confidence and the perception of strength in the banking system, yet this may not be a sufficient answer.
Given that we are moving to the NAMA model, it is essential that NAMA allows for the flow of credit. That is not a necessary consequence of NAMA, nor would it be necessarily nationalisation, but we must ensure that the mechanisms are in place. Whatever model we use, we must ensure that a consequence of that model is the flow of credit and that the banks are working again in the interests of small businesses and individuals throughout Ireland.
I mentioned the French example last night, where economic minister Christine Lagarde has set up a credit mediator scheme. In this scheme, banks are not only encouraged in rhetoric to start lending again and free up the credit flow, but they are named and shamed if they do not lend to viable businesses. There are figures in the weekend newspapers which show that 10,000 small businesses have been assisted since this mechanism was put in place. I am grateful that the Minister answered my point. I understood him to say that he was planning some kind of mechanism that was similar to the French model. I am not sure what he is indicating right now——
I am exploring the implications of the French model for our institutions.
He does not want to hear about Japan or France.
I think he would prefer if I referred to France rather than Japan.
I am happier in Paris.
He is referring to asset management as opposed to the control of credit.
He is referring to credit control in France. It is a bit like the Boston or Berlin model. There seems to be merit in providing for something a little more concrete than guidelines to banks to free up lending. There should be some strengthening of that in the Bill.
Amendment No. 64 is tabled by Fine Gael and it relates to section 210. That section allows the Minister to issue guidelines on lending practices and procedures to facilitate the availability of credit. It is something to which I referred on Second Stage because I am not sure it is strong enough to ensure that credit will flow again. Amendment No. 64 provides that guidelines would be approved by the Oireachtas committee on NAMA. I am glad to see the Minister has accepted that principle in his own amendment No. 63. That amendment states that "The Minister shall cause a copy of guidelines issued under subsection (1) to be laid before each House of the Oireachtas as soon as practicable”. That is welcome because it seems to accept in principle the need for scrutiny by the Oireachtas of the consequence of NAMA, which is whether it has facilitated the banks in lending again. Once that principle is accepted, it would be preferable to go further and provide for an Oireachtas committee, along the lines of the oversight committee proposed by Senator White in amendment No. 1, which would scrutinise the guidelines under section 210. We are all agreed on the importance of section 210 and what it will allow, which is for the Minister to review lending practices and procedures by banks.
The core purpose of this group of amendments is to ensure that the banks are lending again in the interests of the public good, rather than stockpiling cash reserves in their own interests and the interests of their shareholders. We are all agreed on the need to ensure that they no longer act in their own self interest.
I referred on the Order of Business to Ulster Bank's current restructuring programme and the IBOA concern that the new contracts being offered to staff will help to develop a workplace culture based on the old model in which they are encouraged to go along with aggressive policy selling to increase their low pay through commissions and other rewards. The IBOA has rightly stated that we should see a return to the traditional culture of banking. The ethical framework for banks to which Deputy Burton referred in the Dáil is something on which the public need to be reassured. Senator White has rightly pointed out that the public are no longer willing to accept the Minister saying "Trust me." We need to ensure that the banks are seen to act in the public interest, and these amendments are an attempt to ensure that the banks will be scrutinised to make sure that they are acting in the public interest, ethically and in accordance with what we might describe as a traditional, old fashioned culture of banking. Amendment No.1 seeks to ensure a regular review of the operation of NAMA to ensure that it is operating in the public interest.
Senator Bacik spoke about the difficulties involved when a bank influences the work culture of an organisation. This highlighted to me the practical difficulty of nationalising our banking system or chunks of it. The idea that an elected Government would get involved in determining the work culture of an organisation that has been nationalised is just a step too far. We have enough on our plate without having to get into issues. Ironically, that is why these amendments are so important. While we might differ on whether there is a need to nationalise our banking system, I am absolutely clear that much more must be done to sharpen the oversight role of the Oireachtas of the activities and the affairs of our banks. I completely agree with Senator Alex White's point that we can never have too little transparency regarding how our banks are conducting themselves, particularly given the vast investment which the taxpayer has made. My first employer said he wanted our relationship to be based on one principle, which was "no surprises". It will be desperately difficult to do this in such a complicated realm of economic activity, but it seems like a decent objective that we should pursue when dealing with the public as regards the future of Irish banking.
I have three practical suggestions to make to the Minister as to why he should support these amendments or a version of them. First, it appears there would be a political benefit to the Government of the day in involving the Opposition in deciding who will run NAMA. The Minister rightly makes the point about the role a bipartisan consensus could play given the difficulties we are facing. The proposals for an Oireachtas committee on NAMA by Fine Gael and the Labour Party appear to offer an opportunity for some kind of consensus to develop on who could run this kind of organisation.
Second, in all the proposals we have made, it is clear that the Government will still have a majority on the Oireachtas committee. In my short time in the Oireachtas, I have probably argued on 50 amendments like this one and, unsurprisingly, I have been defeated on every one of them. The point has been made that there is confusion between the role of the Oireachtas and that of the Government. None of these amendments, however, seeks to detract from the role of the Government, which will have a majority on all Oireachtas committees. In effect, it will still be able to determine the decisions to be made by each of them.
Third, amendment No. 37 from the Fine Gael group still makes clear that the Minister will be in the driving seat to determine nominees for the sub-committee. If the Oireachtas committee for whatever reason, which appears to me to be intensely unlikely, does reject the Minister's recommendations, the Minister himself will still be able to put forward his own recommendations and, if not circumvent the process, at least dramatically shorten it.
A number of issues need to be clarified because I am certainly confused by some of the argumentation to date. It comes back to the fact that people are referring to banks acting in the public interest. Section 210 contains a reference to guidelines but also deals with regulation and how it impacts on the market. It seems that under the provisions of the Companies Acts, banks are required to act in the interests of their shareholders.
Yes.
I raised this point on Second Stage. The Minister said then that part of the object of section 2 would be to resolve problems created by the financial crisis or facilitate the availability of credit. It may facilitate it, but it cannot actually require it. I would like the Minister to clarify this point, which cuts across the points that have been made by Senators Donohoe and Bacik. No matter how much money we put into the banks, they will be required to meet the regulatory tier one asset requirement, which involves the international Basel rules and regulations. Beyond that, however, our regulator might require the banks to have a higher level of asset retention. Currently, European markets in bank shares require an amount above that again. It is important for the Minister to go on the record of the House in this regard. No matter what the Minister does, credit will not flow from the banks until such time as their tier one assets are approaching 8%, 9% or 10%. It does not matter whether they are nationalised in order for it to work. That should be explained so that people have no doubt about it. It is not that banks do not want to hand out money — they do because that is how they make profits — but they will not do so until they have a crock of gold sitting in the vaults.
I completely agree with Senator Alex White's argument, although I do not agree with the amendment. When the Minister published this legislation in July, I wrote to him and met him to discuss five points of concern. One was the question of political accountability and oversight of NAMA's operations. During our brief discussion the Minister gave me a guarantee that he would examine that point. In sections 58 to 60, inclusive, of the Bill before us he has dealt with all the issues raised by Senators Twomey and Alex White. In terms of dealing with the constitutional officer, the Comptroller and Auditor General is the person to whom NAMA will to some extent be answerable. He dealt with the political issue on the basis that there must be a quarterly report to the Houses of the Oireachtas. He also dealt with the committee issue on the basis that they will deal with the constitutional sub-committee of the Committee of Public Accounts. He went further than that in making them amenable to every single select or joint committee that invites them in. My only objection to those sections is the remarkable drafting — the Minister should examine it — which does not allow the chief executive of NAMA to say anything that might upset or embarrass the Minister.
Yes.
We hope the Minister has not gone that soft and sensitive in this day and age. The Labour Party amendment seeks to delete that couple of lines, and I think the Minister should do so. I have heard the leader of Fine Gael talking about reducing the number of Oireachtas committees. The job of overseeing NAMA would be better done either by the Committee of Public Accounts, the Committee on Finance and the Public Service, or the Committee on Regulatory Economic Affairs. Those three committees were established to do exactly that. I do not know why we need another committee. I agree with all Senator Alex White's points on what needs to be done. I would like to hear from the Minister whether some of that could be done by the existing processes. I prefer those processes because there are three ways forward: the Committee of Public Accounts, a quarterly report to the Houses of the Oireachtas, and the various committees. That is the most efficient way we can deal with it. I have heard no argument as to why we need an additional committee. I have heard a solid argument from Senator Alex White as to why it should be done, but I do not like the idea of a special committee to deal with this alone. I am not attracted by that, but I am attracted by the idea that it should be done by an existing committee. The obvious one is the Committee on Economic Regulatory Affairs, which has not been exerting a lot of energy over the last two years. They were very quick to pull in the regulator and haul him over the coals, but for the two years prior to that they never bothered doing any such thing. I might say they got off the hook very lightly. The Committee on Economic Regulatory Affairs is the appropriate one to do this work, if not the Committee of Public Accounts. The latter committee and the Comptroller and Auditor General are constitutionally based. In any case, under the terms of this legislation, the Committee of Public Accounts is determined by the Dáil to do exactly that. On that basis, the Minister should give a commitment that all the issues raised by Senators Alex White and Twomey will be dealt with by an appropriate Oireachtas joint committee. This can be done simply by each House extending, changing or amending the terms of reference of a joint committee to include everything that has been put forward in detail by Senator Alex White.
I find myself largely in agreement with Senator O'Toole on this matter. These amendments come between the Short Title and the purpose of the Bill. They seek to obtain as much disclosure, accountability, openness and oversight as possible. I can completely concur with that. This is the single most important legislation this House has seen in my period as a Member because it concerns the fate and welfare of the entire country's economic circumstances. This may not be the correct place to ask these questions but, in the spirit of openness and transparency, perhaps the Minister can guide me as to where I may appropriately ask them.
In the Dáil debate, the question of the special purpose vehicles was raised. The Bill does not seem to make any great provision for them on a statutory basis. Will the Minister be kind enough to explain to me the point in this debate at which it will be appropriate to consider them? They are very interesting. I am not sure whether it would be good to give them a statutory basis if they do not have one. I am interested in them because, although I understand completely the reasons behind them, they are accounting reasons. This is an area in respect of which the public needs to be reassured. The activities of the aforementioned Mr. Fitzpatrick are almost analogous in terms of the burying of material that was inconvenient to be disclosed. Although that is not what the Government intends and the measures are being introduced openly, we need to be reassured as much as possible. Perhaps the Minister will tell me when it will be appropriate to open a short discussion on this matter.
I agree completely with the purpose of the amendments. I was very impressed with the Minister's performance last night. He was clear and decisive and was able to take up awkward questions and deal with them convincingly on the hoof. This is what we need in dealing with these very difficult financial circumstances. I am concerned that a multiplication of committees of various kinds could lead to a diffusion of energy and responsibilities if we are not particularly careful. This could be very difficult.
Taking into account the kinds of debates that have occurred, both on the Order of Business and during discussions on financial matters, I note that, even in this House, there is sometimes lamentable polarisation and a lack of unity with regard to the national purpose. It is not realistic that Fine Gael expects, on foot of its amendment, that the Government will be likely to vote in favour of handing the chairmanship of the committee supervising NAMA over to a member of the Opposition automatically. This is not politically realistic at all, although I cannot think of a better candidate than Deputy Richard Bruton, who has shown the same qualities of leadership and incisiveness as the Minister. It would not be acceptable to any Government to hand over the chairmanship of this extraordinarily important committee, if established.
What if it were an Independent?
If it were the best person for the job, it would not matter a twopenny damn.
There was a news report during the summer that the Minister had proposed to the Cabinet that it be Deputy Richard Bruton or Deputy Pat Rabbitte.
It is not realistic that the Government's hands could be tied.
The Labour Party and Fine Gael amendments, if enacted, would be very significant, bearing in mind that they are significantly different in some ways. The Labour Party gratifyingly refers to the Houses of the Oireachtas while Fine Gael does not.
I wonder why.
I assume it is all part of its plan to get rid of this House, about which plan there is varying enthusiasm among the current membership of the party in this House.
According to my learned colleague, Senator Joe O'Toole, sections 58, 59 and 60 already contain provision for oversight and the issuing of regular reports. It would require a very substantial argument to convince an independent-minded person that this series of amendments is one the Government is likely to or would be well advised to accept. I am not persuaded to this effect.
I agree with Senator O'Toole totally in that we have enough Oireachtas committees. That is not to say we could not rejig the make-up of some to focus on the implementation of the sections of the Bill that are most appropriate. It is vital that there be as much accountability as possible. The Minister could consider the idea of the French model of the credit mediator. It would be good, not least to ensure the provision of credit. As stated in the Irish Banking Federation announcement of this morning, the committee could ensure appropriate actions will be taken to protect homeowners. This is covered in some of the amendments tabled by Fine Gael.
I do not know whether the Committee on Finance and the Public Service, the Committee of Public Accounts or the Committee on Economic Regulatory Affairs should be involved. We do not need all three to be involved but the terms of reference of one could be adjusted such that it would focus specifically on NAMA. We could consider the membership of the committee and none of us would worry about who the Chairman would be once it was the most appropriate person. As Senator O'Toole pointed out, it was suggested at the meeting of the Committee on Finance and the Public Service on 30 August that there be an oversight commission. It was suggested that a person of the calibre of former Labour Party leader Deputy Pat Rabbitte could be considered. Individuals such as he could be considered.
Rather than trying to set up another committee, let us consolidate those we have to form one in addition to the Committee of Public Accounts and let it comprise Members of both Houses, notwithstanding that some Opposition Senators want to exclude themselves at this point. Perhaps it would be appropriate that other people, such as members of the Irish Banking Federation or public interest committees, would have seats at that committee. Perhaps the Minister will take this suggestion on board.
Senator O'Toole said it all in his contribution. There are plenty of Oireachtas committees and there is no need for an additional one. Is the Labour Party serious about asking that a committee be established that would report every 30 days? One can imagine how ineffectual it would be. It would hardly have prepared for one meeting when it would have to prepare for the next.
I admire the tenacity with which the Labour Party clings to the nationalisation option. There is a slight inconsistency in this regard. I accept Senator Alex White's bona fides and agree with him on the degree of transparency required by his amendments but he should note that a nationalised bank's requirement to be transparent in the international banking field is not the same as the requirement to be transparent of a bank listed on the Stock Exchange. We would not really know what is going on in a nationalised bank and it would not be as transparent.
Senator O'Toole highlighted a major problem with the——
Senator O'Malley is sporting a red rose this morning.
It is purely decorative.
Very new Labour.
The Senator should try to move a little to the left but not too much.
Senator O'Toole highlighted a very good point. It is not so much a problem with the legislation as we are all trying to get the best out of it. While the Minister has tried to strike a balance with regard to the guidelines on credit flow, Senator O'Toole stated correctly that the banks will do nothing until they have protected their own assets. Irrespective of what we do, we need to face that reality.
Some of the suggestions made are laudable. Senator Bacik, in particular, highlighted the French experience. While something is working there and we should not ignore it, we must realise there is a major problem. Senator O'Toole is correct that banks will not lend until they are secure. If all we are doing is giving them money to shore them up with a view to achieving security, we are doing so without obtaining any guarantees, even though the banks may be free one day to lend. We need to face up to the fact that we do not have any guarantees.
Would Senator Norris like to make a further contribution?
I am reminded of a couple of supplementary questions I wished to ask having reviewed my notes.
I accept what Senator O'Toole said — I note the Minister was nodding in agreement — in regard to the banks' requirement to meet their tier 1 obligations and so on. However, everything else said reinforces the argument for nationalisation of the banks as they would then be required to act in the interest of their shareholders or owners, who would be the people of Ireland through the Government. I do not believe the banks' requirement to meet their obligations undermines entirely the idea of nationalisation, which I am rather inclined to favour.
Reference was made to the muzzling of members of the committee or senior civil servants, an issue on which the Minister fought a stealth battle in the Dáil, which I watched with great interest.
I am sure an amendment on the issue has been tabled for discussion later——
I am sure there is.
——on which the Senator has a good chance.
There is a good chance on it; that is excellent. I note the Minister fought a stealth——
No, the Senator will have a good chance on it.
We have a good chance.
If an amendment on the matter has been tabled we should not be discussing it now.
I am not directly discussing that amendment but I am using it as an analogy for what I wish to ask, namely, that in the composition of these committees, whatever about muzzling of civil servants — I point out that the Minister has indicated there are precedents in other enactments to justify this — or utterances made in public, will the Minister agree that given this is such a serious matter it is important we have not destructive but intelligently critical people who will have the breadth of expertise and intelligence to give a critique from inside? This does not mean exclusively people from either House of the Oireachtas. I would hope to be a member of this committee be it an existing committee following expansion or a new committee. It is important this type of critical intelligence is sought. I speak in this regard of people like Mr. Peter Matthews who was extraordinarily impressive recently in analysing the situation. It is hoped that, if we are to obtain the benefit of the best and most varied input, we will include people who will alert us to possible dangers which may not have been by those closest to the preparation of this Bill.
I refer to a comment made by Senator Donohoe about his first employer who said that the guiding principle of their relationship was that there should be no surprises. I regret to say that life is full of surprises. It is not possible to edit all of them out but it is good to make prudent provision to ensure one is alerted to as many of these potential dangers as possible.
I believe there is merit in Senator Bacik's proposal in connection with the French model whereby a credit mediator has been appointed to keep a watchful eye on how the banks are performing, with a view to ensuring best possible practice, and to publicise information in this regard. We must face the fact that under the Basel round of agreements the tier 1 capital ratios for the banks has increased and, therefore, less money will be available for borrowing. This will affect borrowing into the future.
It may be — I fear this is the case — that some banks trading in Ireland, in particular banks caught up in sub-prime lending in the UK, including the Royal Bank of Scotland which has subsidiaries in Ireland, Ulster Bank and First Active, are using Ireland as a piggy-bank whereby they are taking in deposits but are not lending. If that is the case this could be highlighted by the appointee in this area. This could be done not necessarily by way of a new appointee but by way of giving an additional responsibility of a person in an existing position. There is merit in Senator Bacik's proposal, although I do not believe it is necessary to achieve this by way of amendment.
I wish to make two brief points. In regard to Government Senators and the need to make use of the current committee system, the Labour Party and Fine Gael amendments make it clear the powers of the proposed committee or sub-committee would be different to that of the existing committee structure. These proposals seek to confer upon a new committee a set of powers that existing committees do not have. While I struggle to understand how we could make use of the existing committee structure, I agree with Senator MacSharry that if a new committee is to be established, this should only happen on condition that at least one of the existing committees is abolished.
I take Senator Norris's point that in life there are surprises. I know that as well as he does. However, given we are investing €54 billion of taxpayers' money, we should be doing much more than we have done up to this point to spot potential surprises.
It has been a useful debate in that we have covered an amount of ground. I do not believe Senators have trespassed too far and I will try to deal with all of the points raised in the context of the amendments before us.
Listening to Senator Norris, I was reminded of the late Professor F.S.L. Lyons's assessment of the position of the old Irish Parliamentary Party in the House of Commons in London whereby they were in the assembly but not of it. It struck me that the Fine Gael Party now finds itself in a similar position in Seanad Éireann in that it is in the House but not of it.
I am glad I gave that opening to the Minister.
While it exists, we are of it.
The Fine Gael amendment suggests that the oversight committee should be exclusively comprised of members of Dáil Éireann.
Where does the amendment say that?
As I understand it that is a criticism made in the course of the debate.
The amendment states "by a Resolution of the Houses".
The chairperson must be drawn from the Dáil.
I am glad to hear Fine Gael is still of the assembly as well as in it.
They usually are drawn from the Dáil.
On the merits of the amendment, the words used——-
The Minister should explain why chairpersons of the Houses of the Oireachtas committees are normally drawn from the Dáil.
My objection to the amendments tabled by Fine Gael and the Labour Party relates to the use of the word "oversight". Oversight in NAMA is a matter for the board of NAMA. It is elementary good corporate governance standard. The first issue to be resolved is the board and how it will hold the managing director and staff of NAMA to account. When one has addressed that issue one must consider how the board will put into the public domain sufficient information to ensure public confidence. I agree with Senator Alex White that public confidence is important. The main issues are how the maximum amount of information is put into the public domain and how we, as representative institutions of the State, are scrutinised in terms of what is taking place in the agency. Oversight is a matter for the board.
The legislation provides that the first managing director be appointed by the Minister. Thereafter, such appointment will be made by the board, which is as it should be. The Minister makes the first appointment owing to an urgency to appoint a managing director. The managing director will be held to account by the board. What the Houses of the Oireachtas must do is scrutinise the operations of the agency. To be in a position to do this, the Oireachtas must have the maximum amount of information at its disposal. That is the issue raised by Senator White. If one examines the legislation in terms of corporate governance one will see we have gone a long distance in this regard.
This legislation includes a number of innovative steps, for which I do not claim credit, not taken in other legislation. These steps are, as stated by Senator Donohoe, essential given the amount of public investment involved and the need to sustain public confidence in light of all the damage that has been done by financial institutions and of all the failures in terms of holding them to account. It is important we put in place a sustainable system of governance and surveillance of what we are establishing.
Section 19 lays down specific qualifications in regard to board members. The requirement for the establishment of a register, in terms of declarations of interest, is specifically set out in sections 30 and 31, which is an unusual type of provision. A register of members' interests, similar to that which applies in respect of Members of the Houses of the Oireachtas, is fully provided for in section 31, which is not a normal type of section in terms of the corporate governance of the majority of State bodies, agencies and corporations. The levels of disqualification provided for in section 22 are largely standard. On the question of board committees, again these are specified in the legislation, including the audit, credit and risk committees. I am open to suggestions in that regard.
The Prevention of Corruption Acts are specifically applied to this body by section 16. In regard to reporting, as a result of the discussion in the Dáil we moved from a biannual report to a quarterly report. I agree with Senator O'Malley that to insist on a monthly report would put a huge burden on any organisation. What is important about the report in section 55 is the high level and amount of information that must be furnished in the report. For example, details of the amount of legal proceedings instituted by the agency must be set out.
The position of the Comptroller and Auditor General is fully safeguarded in section 57. The audit is conducted by the Comptroller and Auditor General. Senator Norris should be aware that applies also to any NAMA group entity, such as the special purpose vehicle.
Senator Bacik made the case that three years was too long a period, but when one takes into account that there is a quarterly report, an annual audit, a three-year report from the Comptroller and Auditor General separate from the audit and a ministerial review every five years it is apparent that there is an intense level of supervision. That is as it should be in the context of the legislation. There is also a power in section 35 to provide for codes of practice. Within three months after the establishment day NAMA must prepare codes of practice for approval by the Minister on a wide variety of matters that would be of understandable concern to all of us. A robust corporate governance structure is written in to the legislation, which is as it should be.
Senator Alex White made the point that there is a great deal of public distrust. He stated the Taoiseach and members of the Government indicate they are acting on the best advice available but that public trust has broken down. We have written into the legislation many provisions that are unusual for bodies of this kind, which ensure public trust can be rebuilt in the body itself. As part of that I have indicated in the other House - I wish to confirm it again in this House - that I would consult the Opposition leaders, not just on their suggestions for appointments to the board, but that I would disclose to them whom I have in mind for appointment so that we would have genuine all-party agreement on the appointments.
The amendments canvass the possibility of Oireachtas hearings. That would be a big innovation in our system. It is a subject that has been discussed previously and comparisons are drawn with the United States. However, the United States has a different form of government from us in constitutional terms. Our system of government rests on the proposition that Ministers are responsible for their decisions and have to account for their mistakes, including those in regard to appointments. I am not satisfied that a more diffused system of responsibility will necessarily produce the right choices for the jobs.
What I have done is given an undertaking in the other House, which I will repeat in this House, that I will consult with the Opposition leaders on the composition of the board and the identity of the chair. That is essential. The most important oversight issue relating to NAMA is to get the right people on the board in the first place, because they are the people who will be dealing with the managing director and his staff day in and day out. That is the first fundamental corporate governance issue and public confidence issue. We have to jump that hurdle. I appeal to the parties opposite to take a responsible approach in that regard.
When we guaranteed the banks we insisted on having two public interest directors appointed in each of them. Those appointments were made in consultation with the Opposition leaders. That procedure worked well. Senator Norris suggested that one of the arguments he saw in favour of nationalisation is that the State is the shareholder in a nationalised entity. Again, as I pointed out last night the State has become a shareholder in the case of Bank of Ireland and Allied Irish Banks. As we know, it is an exclusive shareholder in Anglo Irish Bank. The State is a substantial shareholder in the two principal retail banks. The Minister has power to appoint four directors who have a fiduciary duty to all the shareholders, including the State. The argument suggesting that the original public interest directors were in a weakened position because they had no shareholder behind them has now in effect disappeared. The State is in a position to appoint directors and they act in the best interests of a block of shareholders who include the Minister for Finance. The argument about the public interest director being ineffective has lost a great deal of its weight since the State became a shareholder in the two principal financial institutions.
Senator Alex White referred to the question of an inquiry into banking generally. It will be essential in the future to carry out such an inquiry. Were a detailed inquiry instituted at this point I am not sure that the banking system in its present fragile state would be in a position to perform its duties and to operate a banking system. We must also take into account the current pressure on the State institutions. I accept there is a need to have a retrospective examination of what has happened, but I do not accept that now is the time to do that. I say that because of my experience of working with the various institutions of State and also dealing with the banks in question.
Contrary to the suggestion that has been given much publicity, that there has been no change in the banks, there has been a great deal of change in them. In the six guaranteed banks, for example, five of the six chairmen of the relevant boards have disappeared and five of the six chief executives have disappeared. That is a substantial level of change. We all know how in most corporate bodies the chairman and chief executive are the most important positions. We have also insisted on the rotation of the remaining independent directors who are not connected with the executive management of the banks in question. In addition, taking the executive managers' positions in those institutions, apart from the fact that five out of six chief executives have gone, in the case of Anglo Irish Bank and to a lesser extent Allied Irish Banks, there has been an enormous executive turnover and retirement. That puts any bank under serious pressure to recruit suitable replacements and to ensure the bank can continue operating as a viable entity. There is not an endless number of persons available who know how to operate and manage banks. It is a specialised skill requiring specialised qualifications.
The Attorney General has advised us that the Bill is in accordance with the Constitution. It is for the President to decide if a reference is appropriate. It is not a Money Bill. I am not seeking an earlier signature motion but, equally, it is a matter for the President to consider in the exercise of her powers. I do not suggest she should exercise that power, I simply say the Attorney General has advised us that the Bill is in accordance with the Constitution.
Senator Twomey raised the issue of Oireachtas oversight. In this context, oversight is not the correct expression. Oversight must be in regard to the board and I have outlined my proposal in that regard. I should then say where the Oireachtas should position itself. There was much discussion on the matter in the other House. When I introduced the supplementary budget I brought in drastic reductions in the remuneration for the position of Chairman of the various Oireachtas committees and I abolished the remuneration for the Vice Chairman and convenor. My thinking was to allow the Oireachtas itself to tailor its appropriate committee structure.
The committee structure in the Oireachtas should spring from the agreement of all the parties. I did not want it said that financial incentives were provided to have a proliferation of committees. If the Oireachtas wants a proliferation of committees it is open to it to do so because there is no great financial advantage to its members in so doing but, equally, it might be that the efficiency of doing business in the Houses is impaired by having too many committees. In the other House some in the Labour Party expressed the view that a sub-committee of an existing committee would be preferable. Fine Gael preferred the idea of a distinct committee which would have some functions in regard to NAMA. I have an open mind. Senator O'Toole suggested we should use the Oireachtas Joint Committee on Economic Regulatory Affairs and arrange for more work for it to dispose of. What I am willing to do is to see how the Oireachtas scrutiny of NAMA can be strengthened through the establishment of a dedicated committee or sub-committee or the adaptation of an existing committee. It does not require legislation to do that. It is my intention to write to the Chief Whip with a view to preparing an Oireachtas resolution setting out how a committee or sub-committee can be established to ensure there is effective Oireachtas scrutiny of the appointment of the agency. Any such resolution will have to be approved by the Houses. Oireachtas scrutiny is important to ensure there is public confidence in the operations of NAMA. Quarterly reports will be laid before the Houses and codes of practice submitted to the Minister, as well as codes of practice relating to lending. Therefore, there is a vast wealth of information to be scrutinised.
On the question of valuations, there is an EU requirement that the Financial Regulator designate an official to validate the valuation process in an independent manner. That information can also be made available to an Oireachtas committee. There is merit in having an Oireachtas scrutiny committee of whatever shape or form and I have no objection to it. However, the amendments seek to provide for the committee in legislation. At a time when we are discussing rationalising Oireachtas committees there is not a great deal of sense in referring specifically to them in legislation and entrenching their existence ad infinitum. It appears more sensible to let the Oireachtas decide the terms of reference and I will not stand like a policeman objecting to them. I have made my basic view known that I do not believe it should be the function of the committee to exercise oversight or substitute its judgment for that of the directors, but if its function is scrutiny, I have no objection and, in fact, would support the establishment of such a committee.
Senator Twomey was concerned about the business plan. The current business plan is a draft plan, not a finalised plan. Under the legislation, the final plan will have to be approved by the board. Its approval is another matter that could be considered by the committee.
Senator Bacik was concerned about the review of the Bill. I am concerned about the number of reviews already provided for. There are two ministerial reviews over the envisaged period and three reviews by the Comptroller and Auditor General, as well as the quarterly reports and the annual audit. A substantial amount of reviews is already provided for in the legislation. That is important.
Senator Bacik also referred to the French mediation scheme and Senators Hanafin and MacSharry echoed her call in that regard. I will examine the matter. For once, I welcome the foreign reference, as it is an accurate and well founded one. However, I am advised that the section we have drafted regarding credit supply is broad enough to encompass what Senator Bacik advocates. Perhaps we will return to this matter when we deal with that section.
With regard to ethical regulation, that is something we must examine in the context of the regulatory legislation. It does not arise in this context.
Senator Donohoe also argued for the oversight role. I have made my view known on oversight. In terms of scrutiny, I agree there is political benefit in involving all of the parties in the analysis of where it is going. I do not believe it should be a matter of a Government using its majority either. A number of candidates were mentioned as possible Chairmen but that is a matter for the Whips.
Senator O'Toole raised a very important issue, the Basel rules and the higher level of capitalisation which banks will require in the future. In making the announcement on Second Stage I confined myself to an industry-wide estimate of the likely discount which would be applied to the financial institutions. I gave a specific figure for each institution in terms of its book debts but I did not give a specific figure for the actual discount which would apply to each institution. That will have to be done through the bottom-up valuation. It is clear that when that valuation is complete, an amount of losses will be accelerated in the banking system. That, of itself, will raise a capital requirement for some of the institutions.
In addition and apart from that issue, there is an international debate about what the appropriate levels of capital provision are in financial institutions. This issue was also raised by Senator Twomey. The new Governor of the Central Bank and the Financial Regulator will guide me on the appropriate level at which the capital ratio should be set to command confidence. The important point is that if one sets them too high, it will inhibit lending. There is a balance to be struck between the confidence one wishes to create in the institution and the level at which one fixes the ratio. The higher capitalisation requirements will also require that the banks raise the funds. In the absence of a capacity to raise the funds on private markets, it will inevitably involve a deeper State investment and greater ownership of the institutions.
Senator O'Toole drew attention to sections 58, 59 and 60 which provide for a substantial amount of Oireachtas accountability and scrutiny. The section containing the time honoured, hallowed formula about the performance of public servants before committees still stands in the Bill. That is simply an expression of the status of the person before the committee.
Senator Norris raised the issue of the special purpose vehicle and, correctly, sought reassurance on it. He understood it was an accountancy device and wanted to know if the taxpayer was protected. I arranged for the Attorney General to examine these sections during the Dáil debate and brought forward a number of amendments which ensure the transparency, disclosure and corporate governance requirements, as well as the audit by the Comptroller and Auditor General, will apply to all the special purpose vehicles. The expression "NAMA group entity" is used throughout the Bill. A NAMA group entity includes a special purpose vehicle. That is how this concern has been accommodated.
I have mentioned the point raised by Senator MacSharry who is attracted to any model that will ensure credit is supplied. I agree with Senator O'Malley about the 30 day reporting. Senator Hanafin also raised the issue of credit.
I have dealt with the amendments and my general approach to them. It is important that we appoint the right board to this agency. That is fundamental. Members of the Oireachtas might wish to scrutinise but they will not scrutinise this operation on a full-time basis. Members have given the Bill much attention but they will not have time to scrutinise NAMA on a full-time basis. Of course, Members have an important role to play but the chairman and the board will have a very heavy burden in ensuring this agency is operated in a correct way. It is very important to strive for all-party agreement on the composition of the board.
I must respond to one of the points made by the Minister and believe I have noted it correctly. He has said that in Ireland the role of Ministers is to make decisions, make appointments and be accountable for them. Is he joking? Look at the track record in setting up such organisations. The modus operandi of the Government is that when there is a big challenge before it or a big job that needs to be done, as the Minister has acknowledged, an organisation is established to which the Government subcontracts the responsibility. When we question the Government about the operation of the organisation, we are told the organisation, not the Government, is responsible for the matter. There was a strong example of this a couple of weeks ago when the Minister for Health and Children said the spending of €16 billion of taxpayers’ money through the HSE was not her responsibility. I have no doubt that when the legislation to establish the HSE was going through this House, the same guarantees were given by that Minister as are being given today by the Minister for Finance, that the oversight or scrutiny roles of the Oireachtas would not be diminished by the establishment of the organisation to perform certain roles. We cannot press the point hard enough that there cannot be too much transparency in this area. I accept that no Member of the Oireachtas will have the ability to scrutinise this agency full time. The Minister is right in that regard, in view of all the other things that must be done. The amendments under discussion would strengthen the oversight role of the Oireachtas.
I understand how the system of government operates in America and I accept that the constitution of that country is different to that which obtains here. Nonetheless, the legacy of ministerial accountability the Minister evokes when making his points is one of which we see precious little in this House.
I concur with Senator Donohoe's assertion that the level of ministerial accountability to this House is extremely weak. When he served as a Minister of State at the Department of Health and Children, the Minister dealt with issues relating to illegal nursing home charges. One of his colleagues in that Department, who is now a Member of this House, attended regular meetings involving HSE officials and senior officials of the Department. Apart from whispering concerns into the ear of the Taoiseach of the day, that individual did precious little about the matter. The current Minister for Health and Children regularly informs this House and various Oireachtas committees that she has absolutely no responsibility for the €16 billion of taxpayers' money that is spent by the HSE. It is important, therefore, that Members on this side seek increased controls with regard to how €54 billion of taxpayers' money and the recapitalisation of the banks will be dealt with.
The Minister stated that he is going to deal with the leaders of the Opposition in the Lower House. How does he propose to deal with Independent Senators, who often do not enjoy the benefit of having colleagues in the Lower House? Will he take these Senators into account when deciding on the membership of the new committees? Fianna Fáil does not have a great history of respecting this House. A Government led by Fine Gael was the only Administration to appoint a Senator to the Cabinet.
On Second Stage, my contribution focused on the business plan for NAMA. There are three aspects involved, namely, the special purpose vehicle, SPV, NAMA and the banking sector, which is going to be recapitalised. Will the members of the board be appointed on the basis that they possess the requisite business ability in this area? Will the SPV or the board of NAMA have overall responsibility for NAMA's general business? How will the developers, contractors, etc., who avail of access to NAMA be accommodated in the context of the business plans they will put forward? Legislation is one thing, there is also a need for clarity in respect of how all this will work. Will the Minister provide some details in that regard?
I agree with the Minister's assertion on Second Stage that NAMA is not the appropriate mechanism to deal with people's mortgages. That is an important point, particularly when one considers that NAMA is designed to protect the taxpayer. In view of the statement from the Irish Banking Federation this morning, it will be necessary to introduce new legislation to cater for the new situation that has arisen. It is not good enough to have an aspiration. Senator MacSharry used the word "tsunami" to describe the at least 35,000 people who are going to experience severe difficulties in respect of their mortgages. I accept the Minister's statement to the effect that he is giving consideration to this matter.
NAMA could represent a great business opportunity because there are many half-finished buildings and developments. It will not do anyone much good if they are left in that state.
The Senator should confine his remarks to the amendments under discussion.
I want to focus on the business plan because Senator Twomey referred to it during his contribution. It is important that we should deal with the plan in some detail, either now or at a later stage.
I wish to clarify, in the interests of historical and factual accuracy, that during his time as Taoiseach, Éamon de Valera appointed a Senator to the Cabinet.
We are dealing with amendments Nos. 1, 2, 31, 37, 38, 52 and 64.
I was merely offering an important point of clarification.
Someone may have made a comment on a particular matter but it is not relevant to the discussion on the amendments.
It was historical all right.
It may not be relevant but I was obliged to clarify the position.
These amendments relate to oversight, scrutiny and credit flows. Senators are concerned, rightly so. I am glad the Minister stated that the buck will stop with him but several other Ministers also said that on previous occasions. I take it that he was serious in what he said.
There is a great deal of secrecy in the Bill. There will be many reports submitted to the Minister for Finance which will not be made public. These will be placed in a closet and will never be seen by anyone other than the Minister or one of his successors.
Will the Financial Regulator have any function in respect of NAMA? Having read the Bill, I cannot identify where the regulator will have a role in respect of either regulating particular matters or scrutinising the operation of the legislation. Under the Bill, NAMA will be in a position to lend some €5 billion under its working out strategy. As a result, NAMA will have the power to borrow €5 billion. It is good that there is a cap in this regard because when it came to the banks, there was no cap with regard to the amount of money they could borrow. Anglo Irish Bank got into such grave difficulties because its borrowings increased from €30 billion to €90 billion within a three-year period. The Financial Regulator failed to exercise its functions in respect of the borrowings made by the banks.
If the Financial Regulator does not have a function in respect of NAMA, who will be responsible for scrutinising the latter's activities. At some stage, NAMA may spend up to €50 billion which would equate to it building or completing 25,000 houses.
We are dealing with amendments Nos. 1, 2, 31, 37, 38, 52 and 64 and Members should not make Second Stage speeches.
I profoundly disagree with the Minister's characterisation of what oversight entails and of his perception of the role of NAMA in satisfying a requirement in respect of oversight. I will comment on that matter in a moment but I wish first to refer to some of the issues raised by other Senators.
I am not sure if I spoke earlier on the two other amendments in this group that were tabled in my name. I refer to amendments Nos. 38 and 52, which relate to the issues under consideration and which would provide for a heightened level of parliamentary scrutiny in respect of the operation of NAMA. These amendments relate to sections 19 and 119. Section 19 deals with appointments to the board. We want such appointments to be made in the context set out in section 19(2). However, amendment No. 38 also stipulates that a person to be appointed should be "approved by a nominated for the purpose by the Houses of the Oireachtas". Section 119 deals with the appointment of the valuation panel by the Minister and amendment No. 52 states the nomination of a person or persons to be appointed to that panel should also be approved by the relevant committee of the Oireachtas. I am glad colleagues have picked up on the fact the Labour Party amendments are clear and refer to both Houses and not just one House of the Oireachtas. We were careful about that.
In respect of the Fine Gael amendments, I agree with Senator Donohoe and with the suggestion that we set up a dedicated committee. Like him, I would have no difficulty with at least two existing committees, if not more, being replaced or abolished to make room for the sort of committee Fine Gael suggests. With all due respects to the joint committees, of some of which I am a member, the role, function and agenda of the committee as envisaged by Fine Gael seems to be more important than any other set of agendas with which any committee of the Houses is currently wrestling. I agree with him that if the problem is there are too many committees and the Minister does not want to set up another, the way to resolve that is to start dealing with which of the other committees should be removed and to rationalise the number of committees.
On the matter of what sort of people would be involved in such a committee, someone referred to the various interested parties and mention was made of the Irish Banking Federation, the banks and other institutions. The banks and the financial institutions have their own way of being heard. I was going to say they have the ear of the Minister, but that might upset him. There is obviously a line of communication between the banks and the Minister. Therefore, the banks do not need to have a place given to them on a committee that would have them coming in and out of this establishment. Clearly, they are already represented. When we talk about scrutiny and oversight, we want a committee that will have some teeth and some power to make the bankers amenable to question in this establishment. It is not that we want them to be here for their own purposes or so that they will have somewhere to go to issue press releases. We want to ensure they will be made amenable to serious questions which they must answer. This is the core purpose of such a committee.
The Minister spoke about the NAMA board being responsible for dealing with oversight. I do not agree. Perhaps there is an issue of nomenclature in this. Real scrutiny must be at a remove from the body being scrutinised. Otherwise there is no scrutiny. The role of the board of NAMA, which is set out in the legislation, is to run NAMA. The kind of oversight I have in mind may be different to oversight in company law or governance terms, which seems to be what the Minister is talking about. That is concerned more with the running of an institution and, as it were, the overseers or supervisors of what happens within the institution. That is one type of oversight and I understand it is to that the Minister is referring. However, I am not talking about that and perhaps we should get another word for what we mean. I am talking about genuine scrutiny at a remove from the persons and the bodies of the institutions that are being scrutinised. Otherwise, there is no point. We are just going through the motions of oversight if it is going to be done by the very people we purport to oversee.
Nobody is tied to these amendments. As Opposition parties, we do the best we can in terms of trying to bring forward the principles behind our ideas in amendments. If the Minister has some other way of addressing the problem I have identified, I am all ears. With respect, he has not addressed the problem in his contributions on this debate because he says the board of NAMA will deal with oversight. In fairness, he points to sections 58 and 59, as did Senator O'Toole earlier. However, we are living in a new world. There is a real problem that goes to the heart of our public administration and how Parliament operates or does not operate. We go into and out of committees and the House, but many of us do not have a particular level of expertise, especially in the area of banking and financial institutions. We must be honest and admit we do not have that expertise.
For that reason, our proposal suggests using people with such expertise, people who could be appointed to the body so that we can avail of their expertise and knowledge to engage in oversight through the Oireachtas. There are people who could take on this role. I say to Senator O'Malley that many things happen in this town in 30 days and a lot could happen in less than that. The Minister knows this. If there is sufficient pressure put on people, whether on professional advisers or others, to provide information and produce reports, they can do it overnight. Our amendment does not seek daily reports. We are amenable to a reasonable suggestion which might be longer than 30 days. Senator O'Malley should not get so upset about the 30 days. I assure her that for a fraction of the fees it is envisaged NAMA will pay professional advisers for a period of up to ten years, we could easily get highly reliable and independent experts in this city or country to carry out this function efficiently and usefully for the public. What we are talking about is getting the information and providing oversight in a manner that can be understood and absorbed by the public.
I am a bit of an extremist on the issue of information flow. It is for that reason I made the point earlier with regard to saying something was done on the basis of the best economic advice available. I say let me see the advice. I want to see the advice that was got to the contrary. I want to see the papers that show the Minister rejecting that advice or not proffering it and proffering the other advice. Commercial sensitivity is fine. There are certain issues around which the Minister might want to put a red line. However, these should be very few. I tend towards the Scandinavian approach. The Minister understands my point. The point I am making is that Government papers and the papers available to bodies acting in the public interest or on behalf of the public should be far more freely available to the public than they are.
I think it was Senator Regan who spoke on the Order of Business about a lack of detailed information on decisions, even the decision to decide to take the NAMA approach. This lack of information is lamentable. I would be interested in reading the papers the Minister and the Taoiseach talk about as demonstrating the best economic advice available to the Government. Perhaps the Minister should consider publishing them. I want to see the other papers as well. I am quite sure there was a debate in Cabinet about this. There must have been, because at least one Minister said he sat down behind the Minister in the Dáil one day and said to him he thought the banks would have to be nationalised. I cannot remember whether I was told this at a residents' association meeting or whether it was more formally. In fact it was more formally.
We are dealing with amendments, not residents' associations.
I am saying this in all fairness. I am not criticising the Minister for the Communications, Energy and Natural Resources, Deputy Ryan, in that regard. What I am saying is that if the Government has a debate, the Minister can stand up——
We are 55% of the way there already.
I do not understand. What I said was not meant as a criticism of anybody.
I am just saying we are 55% of the way towards nationalisation already.
Exactly. What is hilarious about the Minister's position on nationalisation is that when he is pressed he says: "No, we could not have nationalisation, for all the reasons that Dr. Ahearne has given in The Irish Times.” However, when he is pressed and wants to argue he says: “Sure we already have it or nearly have it.” Which is it? The Minister either thinks it is a good idea or he does not.
Senator Norris made an interesting point with regard to the Minister. He said the Minister is on top of this issue and he gave a good performance in the Seanad last night on it. I agree with that. I was here too. However, that does not answer the point made. No Minister can carry the burden of both making decisions and of running these institutions and also be the party that will communicate issues related to it.
Progress reported; Committee to sit again.
Sitting suspended at 1.30 p.m. and resumed at 2 p.m.