Residential Mortgage Debt: Motion (Resumed)

The following motion was moved by Deputy Thomas Pringle on Tuesday, 3 May 2011:
That Dáil Éireann:
recognises that:
the burden of bank recapitalisation severely limits the capacity of the Government to positively lead this country out of recession and back to economic normality;
the burden of negative equity and mortgage arrears severely limits the capacity of the households of Ireland to live happy, secure and productive lives;
the banks, regulators and previous Governments were negligent in allowing the "property bubble" to arise and failed in their fiduciary duties to their customers, especially to mortgagees of principal private residences — the families of Ireland — to whom they had a special duty of care;
the Bank Guarantee and NAMA have crippled the normal workings of our financial and property markets and have not as yet contributed any positive outcomes;
arising from the unique circumstances that now occur, emergency measures must be used in order to solve the problems caused by earlier, and flawed, extraordinary measures;
real people are living in real houses and making real payments on these "negative equity" homes while their banks are exploiting the financial situation for their private benefit;
the wider economy is in desperate need of fresh credit and renewed banking competition; and
the dangers of allowing families to be trapped in a lifetime of debt and lost economic opportunity far outweighs the current selective interpretation of the "moral hazard" of assisting families in negative equity; and
to instruct the Minister for Finance, as the controlling shareholder in the covered banks, to adopt a policy of using whatever emergency measures are deemed necessary to reduce the unsustainable debt burden being placed on mortgagees of principal private residences in the State; and
to ensure that the means used minimise the burden on the taxpayer and ensure that households can contribute fully to our national recovery.
Debate resumed on amendment No. 2:
To delete all words after "Dáil Éireann" and substitute the following:
"—recognises that the recapitalisation and deleveraging of the banking system will facilitate increased lending into the Irish economy and help underpin economic recovery;
endorses recent reforms in the Central Bank to strengthen the regulatory framework and also the Government's plans to introduce legislation to enhance the legislative framework governing financial regulation and supervision in Ireland, consistent with best practice international standards;
notes that the Chairman of NAMA, Mr. Frank Daly, has recently stated that the Agency is exploring ways by which it can provide finance for commercial and residential property deals in line with its objective of reinvigorating the Irish property market and that he envisages that NAMA will work with the two pillar banks to identify solutions which will increase access to residential mortgages for its Irish residential portfolio;
notes that there are significant Government supports available to assist mortgage holders who are in arrears and are experiencing difficulties with repayments in respect of their principal private residence, including:
the Mortgage Interest Supplement Scheme (MIS) which provides an important safety net for mortgage borrowers who get into difficulties and that more than 18,500 families are now benefiting from this support;
advice available through the Money Advice and Budgeting Service (a significant portion of the MABS client base are mortgage holders);
protection to mortgage holders provided by the Central Bank's statutory Code of Conduct on Mortgage Arrears (including a moratorium on legal actions by the lender provided the borrower is co-operating and the mortgage is sustainable) which applies to all regulated lenders; and
lender forbearance (at end of the last quarter of 2010 there were circa 60,000 rescheduled residential mortgage accounts while lenders representing the majority of the market are set to introduce a deferred interest scheme in 2011, which will extend present levels of forbearance);
welcomes the fact that the existing supports are working and the level of repossessions of family homes remains low;
affirms its support for the Programme for Government under which a number of proposals aimed at helping mortgage holders in difficulty will be examined;
commends the Government for its actions to stabilise the financial system and to restore the public finances thereby protecting jobs and home ownership; and
expresses its confidence in the success of the Government's efforts to deal with the impact on Ireland of the worldwide financial crisis."
—(Minister for Finance).

Deputy Ellis was next to contribute but as he is not present I call on a Member on the Opposition benches to speak. There are ten minutes in this slot. Are you happy with that, Deputy Higgins?

A Leas-Cheann Comhairle, I was supposed to lead the next Technical Group slot with a group of Deputies.

I will go back to the Government side and the Deputy will lead the next slot. I call Deputy Paschal Donohoe. Is that agreed? Agreed.

I thank the Leas-Cheann Comhairle. I am delighted to have the opportunity to speak on this very important matter and commend the Government amendment to the motion. This motion crystallises an issue of which we are all very much aware, namely, the growing number of people who are experiencing great difficulty in paying the mortgages on their homes. The two consequences of that are, first, as they encounter difficulty in paying the mortgages on their homes that then cascades into difficulty in paying debt in other areas of their lives such as credit card debt, which results in even greater difficulty in making ends meet. The second consequence we are all aware of as constituency politicians is the huge amount of stress and personal difficulty that causes.

The reason this problem is of such concern to the House is the potential for it to become more serious resulting in more people being unable to pay their mortgages. Leaving aside the huge social difficulty and pain that it causes, it also has the ability to cause further damage to our economy and to the banks we are trying to keep secure and stable to meet the needs of the economy.

I read with great interest the motion brought forward by the Technical Group but my difficulty, and it is one of the reasons I oppose the motion, is that while I agree with the analysis put forward in the motion I could not find the solution indicated anywhere in the motion. The only line regarding a possible solution is the reference to "using whatever emergency measures are deemed necessary to reduce the unsustainable debt burden" but nowhere does the motion lay out what those emergency measures would be.

With that in mind I took time to read the contributions made by each of the Deputies proposing the motion to see if I could find examples of the measures they had in mind. In Deputy Thomas Pringle's fine contribution, and I agree with the analysis he outlined, there is only one sentence that lays out what he would do in regard to this problem. It states: "There are proposals relating to debt forgiveness, increasing the terms of loans or engaging in debt for equity swaps". It acknowledges those proposals but it does not indicate the ones that would be chosen. As I read through all the contributions, with the exception of the contribution of Deputy Stephen Donnelly, I could see an analysis of the issue but no reference to the solutions. The only solution laid down and which different Deputies commended was the idea of debt forgiveness. That issue creates huge tension because while there are currently 40,000 people who are finding it very difficult to pay their mortgages there are 746,000 people who can pay for them. Dealing with the difficulty for those people who cannot pay their mortgages will create further cost to the taxpayer and to an Exchequer and a Government that is struggling to pay for social welfare, education or health care commitments.

In terms of the course of action this Government has outlined, it is committed to putting in place a moratorium on house repossessions if it is clear that the borrower is doing all he or she can to pay the mortgage. It has also brought forward a detailed programme of action that was detailed by the Minister, Deputy Michael Noonan, last night which laid out the options available in that regard.

More needs to be done about this issue. The Law Reform Commission report on bankruptcy law reform is an important report containing many imaginative ideas that should be explored. Our bankruptcy laws and provisions are out of date and are quickly becoming part of the problem.

There are other new ideas such as the negative equity loan proposed by Karl Dieter. It is an interesting idea that involves putting in place a loan that would be carried forward from a property for which somebody is unable to pay that would relate only to the negative equity. Those are the types of ideas this Government should explore further with a view to finding solutions that would make a difference.

Like Deputy Paschal Donohoe I commend the proposers of the motion and agree with their analysis but it falls short in terms of solutions.

An example occurred during the week that I would like to share with Members that explains at a microcosm level, and can be extrapolated to the national level, the terrible bind the country is in with the legacy debt for households, the banks and the country. In early 2007 a public servant who is now aged 50 sold a house and realised €100,000 of equity in that house which they invested in a new house in a provincial town. That new house cost €420,000. That was a prudential level of equity investment in the new house in early 2007. This person has worked in the public service all their working life and four years ago, at 46 years of age, they made this second home investment. A total of €320,000 was borrowed from a building society which is now a bank and a 21 year loan entered into for €320,000. Prudentially, a five year interest only fixed rate of interest of 5.5% — that was before European Central Bank interest rates fell — involved a €1,480 monthly repayment commitment. That was fine. It was prudential. There was nothing wrong with that but because of the collapse as a result of total mismanagement of the banking and financial sector and the economy, and the way the finances were organised up to that point, the position now is that that public servant has experienced a huge drop in net take home pay in the order of 20%. The €1,850 monthly repayment for the loan on the house was not possible within the income constraints. That person took the initiative with the bank because the banks were operationally under strain and not working according to the normal banking operational levels as a result of the collapse. That person suggested that €1,000 a month would be the new monthly commitment. That happened for 12 months but, weirdly, at the end of that period the bank wrote to say that the difference between the €1,480 and €1,000 monthly payments for the last 12 months must be met. It presented a statement invoice for €6,000 odd, which did not make sense. The real hammer blow, however, is that the house, which cost €420,000, now has a realistic market value of about €200,000. That means the €100,000 investment by that good public servant is gone and they have a debt of €320,000 on their home worth €200,000. That is the shock of the debt burden on this country, which is replicated all over the place, including businesses.

This is not something that occurred in the last 40 days, however. It is something we have had to describe, within that period and against the background of a straitjacket, to get this country's fiscal accounts in order, which has included the revenue-generating elements, the jobs, and which has had to be within the constraints of being revenue neutral, along with all these other difficulties. I invite Members of the Opposition to be understanding, co-operative and supportive in this respect. The EU-IMF report on the first two quarters is like the first nine holes on a golf card. We should not judge it until some more unfolds. We must continue to present the true facts across all levels to achieve debt resolution, especially with our counterparts in Europe.

I am grateful for the opportunity to contribute to this motion. I am glad we are having this debate. We all share a desire to do something about residential mortgage debt. In the coming months, the Minister for Finance will bring forward some new initiatives and one hopes he will take on board some of the contributions to this debate. We do not have all the answers on this side of the House because others have various ideas for solutions. We should put together a range of measures that will help people in various circumstances. Some people's property is in negative equity while others want to sell their homes and move to another area for employment. Many people cannot afford to pay their mortgages. We may quote figures indicating that 40,000 or 60,000 or 80,000 people are under pressure with mortgage arrears, but that is not a true reflection. We all know that hundreds of thousands of people are struggling every week to make ends meet. They have to choose between paying their mortgage or paying for something else, like schoolbooks. We all have a duty to bring forward new ideas for change and I have no doubt the Government will do so. When the Minister for Finance has assessed the situation and has all the necessary information, he will bring forward some changes.

There are a couple of key areas we must home in on. We cannot concentrate too much on the question of debt forgiveness because we could become lost in that debate. Some of the banks, however, are starting to offer products which involve some interest or debt forgiveness. We will work on that, but we must find ways to give people help, guidance and advice on how to get out of debt. They must have a short-term plan as well as a long-term one, including restructuring, facing reality and seeing what they can do to earn extra income. They must receive proper advice, but I do not think the money advice and budgeting service, MABS, has either the required staff numbers or, in some cases, the necessary skills set to tackle this problem for everyone concerned. We need to strengthen MABS by giving it the expertise needed to advise people properly. In that way, people will be able to negotiate with their bank or credit union to restructure loans. Many Deputies are helping people to do this because they cannot get the necessary help and advice elsewhere. Most people will find a way out of this if they are given proper advice and do not let the banks bully them by ringing them ten times a day, which is unacceptable. We have a duty on this side of the House to ensure such help is provided.

We must also create time and space for people to be able to work this out. Some will have earning capabilities, perhaps from a new job, and so will have a chance to repay their debts, but others will not. Both categories of debtor need different strategies because one umbrella will not fit them all. They will need different plans to get out of debt. If a person loses their house, they will become a cost on the State and there will be a drawdown on the housing budget anyway. We must use our imaginations to find other ways of spending that money earlier to prevent the loss of family homes. I have dealt with people who cannot pay off their debts even with debt forgiveness amounting to €40,000 or €50,000. We must find a solution to keep such people in their family homes by some form of equity release either through a bank or private investor. In that way, another person may take a share of the house. Perhaps a local authority could buy the house while allowing the family to remain in it.

There is no magic wand to fix this problem overnight, but we must tackle it with new ideas. Many ideas have been raised in this debate, so I hope we can select the best ones to see what can be done. Everyone must focus on this matter realistically to offer solutions that can work and not just things that sound good. We need ideas that will contribute genuine solutions for people who are under serious pressure, something we cannot ignore.

I thank the Technical Group for bringing this motion before the House. The problem of residential mortgage debt is hurtling down the tracks towards us, so it must be dealt with comprehensively. The programme for Government contains a determined and responsive plan, the key aspect of which is that people will not find themselves on the side of the street as a result of the property bubble. The primary focus of the new Government's agenda is to ensure a two year moratorium is put in place. That is not the only measure included in the programme, however. We need a comprehensive and detailed response to this problem, but there is no one-size-fits-all solution. The previous Government's position was not to address the issue at all. It established an expert group following a Private Members' debate initiated by the Labour Party in the autumn of 2009. That group issued a report on the very day the Dáil went into recess in 2010. Its findings, which were published in October or November 2010, were not debated in this House, despite calls to do so by myself and others. This is not a new issue but an immediate response is required.

Ever since the mortgage crisis started developing in 2007, we had procrastination by the previous Government. What will the new Government do about it? The first thing is to put in place a two year moratorium on repossessions to give people time to sort out their financial position, while allowing them to remain in their homes. We will do that because it is in the programme for Government.

Second, we will convert MABS into a strengthened personal debt management agency which will be established within an extensive and comprehensive legislative framework. Since one size does not fit all, we need to have such an agency to assess the individual needs of people in mortgage distress. In doing so, we will provide professional advice to those in arrears to rebalance the relationship between borrowers and lenders, which is one of the big difficulties facing those in mortgage distress. We need to make greater use of the MIS because that is required as well. The criterion to qualify for MIS is unemployment. The vast majority of people bought houses based on their income three or four years ago but this amount is no longer available to them. Private and public sector wages have reduced and the income ratio for their mortgage repayments is no longer relevant. The MIS scheme, therefore, has to be adjusted.

The three measures relating to repossession also need to change because we need longer-term solutions. To do so, the reconstructed MABS or personal debt management agency needs to assess people on an individual basis and, after two years, in order that the problem is not long fingered or kicked down the road, their case should be reassessed and if they can meet two thirds of their repayment, as recommended in the expert group's report, their mortgage should be restructured.

If they cannot repay this amount, the State needs to step in to cover the repayments and take equity in the properties. An unbelievable sum is allocated to the rent supplement scheme. If people are evicted following repossession of their homes, they will move into another house and claim rent supplement. It makes more sense to provide them with mortgage interest relief. However, householders have obligations as well and the minimum requirement for anybody in difficulty should be to pay the rent differential they would have to pay if they were in receipt of rent supplement. They would still service their loans and have financial obligations to meet but this would be done in a structured fashion.

Over time as this programme is rolled out, the State will step in and take equity in properties. We are a home purchasing nation and we will not change. We need to provide a facility for those in difficulty to ensure they will not be evicted, that the State will provide assistance and that the householder can redeem the equity the State has taken in their property after a period. This recession will not last for six months or 12 years but people need a guarantee that they will be protected by the State for a set period and that they will not lose their homes but they should be obligated to redeem the equity the State has taken in them.

This Private Members' motion is about an gnáth dhuine, the ordinary person, in our communities. In commending the motion, I regret that a solution is nowhere to be found. All of us can sign up to the narrative of the motion. Every day, people who are in negative equity or who have lost their jobs and are struggling to pay their mortgages come into our offices while we are also approached by business people who are in trouble. This is not about speculators and developers who went berserk and lost the run of themselves; this is about ordinary people who are struggling.

The motion does not offer a solution and it behoves all of us not only to provide an analysis but, as Deputies Lynch, Matthews and English said, to come up with solutions that will ensure people retain their homes and small and medium enterprises continue to thrive and to create jobs and that we place a value on work and reward entrepreneurs who create jobs.

The Government has only been in office for two months but I believe we will experience a radical change because the Minister for Finance has been proactive on this issue. Opposition Members do not have a monopoly on concern or condemnation but it behoves all of us, to borrow Deputy Martin's phrase, "to end the Punch and Judy show" and come up with solutions to the problems that affect the ordinary person.

Last night, the Minister stated:

A key objective for government is to strengthen overall fiscal sustainability be separating bank risk from that of the sovereign. Clearly this can be achieved only by returning the banking system to health.

We must return our banks to health in order that they can support and work with entrepreneurs, public servant and home owners and that is why the House recognises that people are under pressure and SMEs are struggling to access credit and are being pursued by banks.

A friend of mine runs a small business in Cork. When I spoke to him yesterday, I told him I would be contributing to this debate tonight. I received an e-mail from him earlier which stated:

The issues as they affect me are....costs are still too high, turnover has receded at a bigger rate than costs such as rent, rates, bank charges, energy costs etc. The legislator needs to force banks (now state owned), energy companies, local authorities and insurance companies to realise that small businesses are the lifeblood of many local towns and the service and employment they provide must be preserved...

The credit circle (as I call it) MUST be serviced in order to maintain jobs and keep non cash businesses afloat. This can only be done at the expense of the interests that I have already mentioned. The banks must work with us rather than against us.

Those are the words of a business person who employs people and who is generating revenue to get our country moving.

I appeal to the Government to go back to the banks to tell them in no uncertain terms that it is not good enough to pay bonuses and to have the former chief executive officer of AIB doing a degree in Trinity College Dublin while ordinary people are struggling. They must co-operate and work with customers and not frighten them. The morality exhibited by many senior bank executives leaves a great deal to be desired and I am concerned that this culture has not been cleaned up. I hope the next time we discuss banking issues, the culture of greed will be no more among executives and they will work in the interests of the people.

I welcome the opportunity to address this issue which is causing no end of hardship, stress, worry and anxiety to many thousands of our citizens. The problems we have are not only in the boardrooms of banks, but also in the living rooms of many ordinary people. There has not been sufficient focus on this aspect of the crisis we are in.

It is a particularly difficult thing to lose one's job and there are no shortage of people in our country who can attest to this. However, to lose one's house and home is far more serious, more difficult and more disruptive to a family's life. In Ireland, for historical reasons, there is a particularly deep attachment to the home and this can be witnessed in economic statistics which consistently show that we have high rates of home ownership, higher than almost all other EU states. For similar historical reasons, the threat of eviction from one's home in Ireland is a deeply disturbing notion. If home repossessions become widespread in coming years, I shudder to think of the social consequences. However, I have no doubt that the Government will never allow such a scenario to come to pass.

I am delighted the Government parties are committed to helping those in difficulties with mortgages through increasing the relief available through the MIS scheme and widening the availability of crucial help provided by MABS. I particularly welcome the revised code of conduct for mortgage arrears which came into effect on 1 January this year on foot of the recommendations of the expert group. It is an important means of helping all residential mortgage holders.

I have become aware of several cases of hard pressed constituents who took out what are best described as "sub-prime" loans and who have been harassed by companies engaged in sharp business practice. For that reason, I welcome the provision that a mortgage arrears resolution process must be initiated by established lenders when dealing with customers in arrears and the obligation on lenders to set up an arrears support unit. These measures will no doubt save many of our citizens from anxiety and anguish which they would otherwise endure. The psychological effects must be borne in mind. They include stress, worry and the sleepless nights which many people are going through. We must do everything we can to alleviate the anguish. I appreciate the Government's efforts in that regard.

On 1 July 2003, the then Sinn Féin housing spokesperson, Arthur Morgan, issued a statement in response to the figures on house prices and mortgages which at the time were spiralling out of control. He accused the main lending institutions of fuelling the fires of unacceptable house price increases. He stated that the main banks, building societies and other lending institutions had a moral and social obligation to curb the excessive and potentially ruinous amounts that were currently being given out in mortgage loans. He outlined that the ever-spiralling house prices showed that the lending institutions were continuing with a reckless if not criminal policy of providing excessive mortgages, especially to first-time buyers and that it should not be allowed to continue. The banks, building societies and other lending institutions were giving away mortgages, in some cases of up to five and six times the amount of annual income coming into a home, sometimes more. We are feeling the effects of that now.

At the time, Sinn Féin said that the lending institutions must realise that their drive for profit and greed needed to be tempered by their social and moral obligation not to allow people to borrow beyond their means and that the excessive and potentially ruinous amounts being given away in mortgages must be curbed. We said all of that in 2003. Other parties and the media said that we were wrong and that we did not have a clue. They did not take us seriously. I take no pleasure in pointing out that we were completely right. Everything we said when it came to mortgages, about the developers being a law unto themselves, the ridiculously high price of houses and the immoral amounts of money that was lent to people — all came to pass.

Everyone acknowledges that something needs to be done about unsustainable mortgages. The Government would not listen to us in 2003, and it is refusing to listen to us in 2011. It is all well and good talking about supporting the mortgage interest supplement scheme, but that fails to acknowledge that the mortgage arrears of some people are so severe that in a single lifetime they will never be able to repay what they owe. A report today from Standard & Poor's indicated that house prices are likely to fall in this country for a few years to come. The statistics indicate that there are approximately 45,000 mortgage accounts in arrears for more than 90 days. That amounts to 5.7% of residential mortgages, which is very high given the comparatively high level of home ownership in this State. The European Central Bank has no problem in increasing interest rates. Unemployment continues to go up, wages are being cut, yet we must all wait for the penny to drop with the Government while it refers to providing supports to mortgage holders in difficulty by making advice available through MABS. I accept that MABS does great work but a budgeting service is of no benefit to a person who has no prospect of ever being able to get back on track with his or her mortgage.

While the Government fiddles as Rome burns to the ground around us, we in Sinn Féin have come up with proposals that should be adopted to address the problem. We commend the Technical Group for proposing the motion, which we urge other Deputies to support, but we need concrete proposals to address the issue, not meaningless amendments as proposed by Fianna Fáil and the Minister for Finance which only reiterate policies that clearly are not working. At least it is clear to the rest of us who take the time to listen to people, as opposed to just seeking direction from the IMF, the absentee landlords of Ireland, on what to do. As my colleague, Deputy Pearse Doherty, outlined last night, Sinn Féin will launch detailed proposals on tackling mortgage distress in the coming period. Debt resolution cannot be left waiting. The Government must begin to take housing policy seriously.

Last year, a group of respected economists also urged that the banks introduce some form of debt resolution and that they accept part of the loss as their own. Given that the State is now effectively running the banking sector, the Government must take proactive measures to force all of the banks and other financial institutions, including the sub-prime lenders who appear to be the most aggressive pursuers of repossessions, to provide real relief for mortgage holders. One cannot leave people in a situation where, through the reckless lending of the banks who were allowed do whatever they liked, they are left shackled with debt around their necks that they will never be able to pay.

Local authorities are just as guilty as the banks when it comes to reckless lending. People were given loans when there was no way they could afford to pay them. Now, the Government must also address the unsustainable mortgages held by those who purchased homes in affordable housing schemes and shared ownership schemes and are local authority mortgage holders. Those who bought in shared ownership schemes generally see their interest rates go up with ECB increases. The Housing Finance Agency makes decisions on whether increases and decreases are passed on to the mortgage holder. The last time there was an ECB decrease, it was not passed on to those mortgage holders. An interest increase was announced days after it emerged that these mortgage holders were six times more likely to be in arrears in comparison to their counterparts who borrowed from banks. The figures have shown almost one in three people with a local authority housing loan are in arrears. Approximately 25,000 of those who have an affordable home, tenant purchase or shared ownership loan from their local authority have not paid for three months or more, according to figures compiled by one RTE report.

The Government has a bizarre attitude when it comes to housing. In the Finance Bill it included a provision to attach a €100 stamp duty fee to the purchase of affordable homes.

There was no Finance Bill.

It may well say that it is only €100, but considering how hard some local authorities find it to sell affordable homes, one must ask what exactly is the point of that. That kind of money-grabbing does the State little, if any, good and only hurts people on low income.

There has been much focus on those with distressed mortgages. However, we must also be mindful that while there is a need to address the issue, the Government must ensure a complete overhaul of housing policy in general. There are still 5,000 homeless people in this State. Distressed mortgages are just one symptom of a fundamentally broken housing system in this country. Long-term homelessness could be ended through the adequate provision of social housing. There must be a dedicated revenue stream for supported accommodation for the homeless and provision of a reliable annual count of all people in homeless services using counted-in methodology. Further to that, rent controls, and a tenants' rights charter must be introduced. Existing tenancy laws must be strengthened and enforced. The Government must take a rights-based approach to housing policy. We said that in 2003 while we were talking about the banks being flaithiúlach with the money they lent. We are still saying it now and urging the Government to listen.

Tá ár ndaoine ag fulaingt. Caithfimid seasamh leis na daoine atá i dtrioblóid agus ar tí a dtithe féin a chailleadh.

I wish to share equal time with Deputies Joan Collins, Seamus Healy, Tom Fleming, John Halligan and Richard Boyd Barrett.

Is that agreed? Agreed.

Deputy Ciarán Lynch referred to the fact that this is a home-purchasing nation. That is true. Some commentators in the past have responded to that as if it was something dramatically unusual that should be changed and that working people should put their lives and their need for shelter at the gentle mercies of landlords, which is another class about which we in this country know a lot from our historic memory. As one who spent 20 years of my life in the hands of landlords, I commend the wisdom of working people who purchased their own homes. This wisdom was manifested during the craziness of the property bubble when rents charged for quite modest homes in working class areas were equal to the gouging level of mortgages being charged.

Deputy Mathews gave us a parable of a good and faithful public servant, prudent, diligent and paying his or her way, who then finished up, as a result of the machinations of the financial markets, hundreds of thousands of euro in negative equity and in an impossible situation. The Deputy then accused Opposition Deputies of having no solution. There is a solution, but there is no solution on the basis of the system he supports, which is the financial market system by which unelected, unaccountable, faceless forces in hedge funds and vampire banks etc. have such enormous control over society and the lives of human beings. We have seen clearly that kind of capitalism is an anarchic system. It is a casino-like system in which there are no solutions.

I spoke about resolution.

That is very clear from the Government amendment, which offers no solutions either. It states more or less that the Government bailed out the banks. It gave tens of billions of euro to European bankers to pay off their gambling debts and now depends on what is called "lender forbearance". In other words, the banks should be kind towards the people they have got into such a crisis. That is supposed to be a solution. There is no solution on the basis of capitalism. Unfortunately, the situation will get much worse. The 60,000 will grow to hundreds of thousands as long-term unemployment takes its toll.

What do we need to do? The solution is that we must refuse to bail out the bondholders and speculators. We must stop paying those debts. Then we should take public ownership of the financial system, but in an entirely different way from the type of panic nationalisations we saw for the purpose of bailing out banks, speculators and developers. We must remake the financial system on the basis of public ownership and the democratic control of society — of working people generally in society — over those institutions. We must do similarly with our fellow working people on a European basis. Then we will have a solution and can recalibrate prices downwards to their real value. We can recalibrate the obscene prices working people were forced to pay and recalibrate monthly mortgages downwards, without question of evictions. Then we will have a reasonable and sane system based on public ownership of the financial institutions and social good.

That is a solution, but we will not get it from a Fine Gael-Labour Party Government, because it bases its solutions on the current market system which is the problem, not the solution.

I noted from the Minister's contribution yesterday that no mention was made of Fine Gael's election commitments in the programme for Government. One of the commitments proposed introducing special relief for those who bought homes between 2004 and 2008 within 100 days of taking office. Measures were also promised to force lenders to reduce variable rates by 0.25% within 100 days.

There is nothing new from the Government for people in arrears or in difficulty. This is another retreat and yet more back-pedalling on the part of the Government. Will the Government deliver on a single commitment it made within 100 days? The Minister outlined the supports in place — a mortgage interest scheme, MABS, a mortgage arrears resolution process and a code of conduct for lenders — but there is nothing new in that. All of these were already in place with the previous Government. While these measures are welcome, they are insufficient. Why, for example, does the deferred mortgage interest scheme which was recommended by the expert group only operate on a voluntary basis? Surely, it should be compulsory for all lenders.

Deputy Ellis referred to local authorities. Currently, local authorities cannot deal with the huge housing waiting lists they have, not to mind dealing with those who are losing their homes. Access to the 20% affordable housing programme has been cut, despite the fact this was a programme the Government encouraged local authorities to become involved in with developers. The programme was inadequate anyway. The Government did not provide funding to local authorities last year in their budgets for house building. Instead, it provided a second bailout to developers and landlords.

It is also scandalous and insane that the State, through NAMA, has purchased some €35 billion worth of property, much of it residential. Last year, I placed a motion before Dublin City Council calling for NAMA to hand over residential properties to local authorities for affordable and local council housing. This motion was unanimously supported by Fine Gael and Labour Party councillors. Such a move is key to supporting people getting access to homes in the future. We cannot continue to let property sit idle while people desperately need a roof over their heads, but cannot afford to buy into the housing system.

I was alarmed by the casino auction that took place last Friday week, at which NAMA sold off residential properties. NAMA then said it intended to pump money into the banks to try and reinflate the property market again. That is not the way the country should be going. We should not try to inflate the economy in that way again. We should not try to inflate housing and land prices again. As pointed out by my colleagues, we should be trying to reduce the cost of homes and interest rates for people. People in the public sector bought houses on the basis of their incomes and the banks handed out excessive mortgages over the years, but those mortgages were based on the incomes people had then. Now, people's incomes have been slashed and the Government is talking about slashing further and putting its hands in people's pockets for water and property taxes. People will not be able to survive that.

The Government must take charge of the situation, particularly in the banking area. It must play a role, although as Deputy Higgins stated it may not be able to if his analysis is correct. The solution will certainly not be on the basis of the Government's economic policies of putting its hands back into people's pockets leaving them with less money to pay their mortgage.

I would like to put forward some case histories. The first relates to a self-employed man with a family living in a modest three-bedroomed house and into the second half of his mortgage. He was doing well but due to an addition to the family needed a modest four-bedroomed house. Thinking he could deal with the mortgage on the new house, he went to his bank and looked for a mortgage on the basis of selling his first house. The bank manager advised he should not do that but should let his house and take out a 100% mortgage for the four-bedroomed house. Unfortunately, the man took that advice. Now he is unemployed and unable to pay the mortgage on either house.

The second case relates to a single public servant living in Dublin in rented accommodation who applied for an affordable house from the local authority five years in succession. Eventually, in September 2008, he was offered an affordable apartment at a price of €278,000 — a good price at the time when the same apartments were on the private market for €470,000. He jumped at the offer and felt he could afford the payments. However, 12 months later, following two cuts in pay and a pension levy, he found himself in significant negative equity and no longer in a position to meet the mortgage repayments. That is the kind of situation in which many people find themselves. The solution is to freeze mortgage interest rates at rates pertaining in 2008 at the time of the bank guarantee, but that is not enough. The capital debt needs to be reduced to the level of the current house price and householders must be legally protected from eviction. That would be a fair way to deal with the current situation.

Some defenders of the banks and building societies claim that it is the home owners' fault; in other words, the people who took on these mortgages should have known better. However, we all know that during the boom, kept economic commentators of finance houses repeatedly told us through the media that people needed to get a foot on the property ladder before house prices rose again, that there was no chance of a property crash and there would be a soft landing at worst, and that the banks were well capitalised. RTE made such broadcasts daily and national newspapers with lucrative property supplements followed suit. We now have tens of thousands in negative equity with many finding it impossible to meet their mortgage repayments and some increasingly threatened with eviction.

The Central Bank is funded by taxpayers including mortgage holders. Its duty is to ensure prudence in banking. Top business people, trade union leaders and senior civil servants on its board, who reported to the Minister for Finance, allowed the banks to borrow €90 billion abroad between 2003 and 2007. They allowed the banks to lend out that money with meaningless security to developers and others creating a property bubble which drove the price of houses skyward. All the Irish elite are represented on the National Economic and Social Council. This includes professors of economics from the Economic and Social Research Institute. The institute is funded by taxpayers to give expert advice to Government but nobody shouted "Stop".

Freezing mortgage repayments, while welcome and necessary, will not be enough. The capital debt must be reduced to the level of the current house price and householders must be legally protected from eviction. That would be a fair way to deal with the situation.

The ongoing debate regarding arrears in mortgage repayments, personal loans and utility bills is often trivialised by some commentators who prefer to link the problem to that of over-borrowing. People who use this very simple yet incomplete argument are not being thorough in their examination of the scale of the problem facing families today. A number of reports published by both the EU and Council of Europe in recent years attribute the issue of indebtedness to unforeseen events such as unemployment, sickness or changes in family situations. In fact, in one report, the Council of Europe concluded: "A high level of consumer credit use is not necessarily an indicator of debt problems."

In recent years Ireland has experienced a severe income crisis affecting everyone. Additionally, in recent months, as highlighted in today's Irish Examiner, the issue of repayment capacity is likely to deteriorate for some time to come as a recent spate of cost increases take their toll, including increases in fuel costs, mortgage repayments, insurance costs and inflation in general. As a society, we have all been asked on successive occasions to reduce our income expectations. It has been argued that Ireland must again return itself to a state of competitiveness. I agree with this policy provided it achieves the right result and gets the country back to work. However, in the meantime, we must accept that reducing all of our wages will have a severe negative impact on some people, especially their capacity to service their debts loans repayments and utility bills. There is no simple solution to the income crisis and resulting debt crisis facing families, including those in my own constituency of Kerry South. However, I am confident that we have the right mechanism to alleviate the extreme financial hardship of those most affected.

At its annual conference on 16 December 2010, the Law Reform Commission presented its report, Personal Debt Management and Debt Enforcement, in which it argues for the overhaul of the laws that govern debt in Ireland. The recommendations make sense and represent a breath of fresh air in an area of law that has long been forgotten. It is shocking that we still operate under laws that were better suited to the Dickensian or Elizabethan era when it comes to dealing with debt in our society. How can we ask people to accept lower wages and yet not change the law to address their diminished capacity to service their debts? We need to act on the Law Reform Commission proposals immediately. This House has a duty to act on those recommendations. Our families will thank us for doing so and society will benefit enormously.

Instead of toiling with the more limited matter of mortgages, I urge the House to address the real issues facing our society today. We do not need ad hoc solutions to deal with negative equity. We need a radical reform of our debt laws and the Law Reform Commission recommendations largely give us the means and the mechanism for doing this. Instead of leaving the matter to the courts and the media, it is the responsibility of this House to legislate and deal with this important issue once and for all.

I also wish to highlight the work of the expert group on mortgage arrears, which came about through consensus between a number of Departments and representatives of interested outside parties. Apart from changes to the code of conduct on mortgage arrears, not a single recommendation has yet been implemented including relatively straightforward procedures such as reform of the mortgage interest supplement scheme.

I call on the Government to finally act on the Law Reform Commission proposals and to enact them into law. Almost six months ago, the Law Reform Commission published its recommendations and yet it continues to sit and wait for action. Instead of providing the means for hope, it gathers dust as our society bends under the burden of rising costs and falling incomes. I welcome what Deputy Ciarán Lynch said on the Government initiatives on the two-year moratorium on repossessions and the proposed personal debt management agency. I also welcome what the Government is trying to do on the income supplement.

Today's Irish Examiner reports that 115,000 gas customers are now in arrears on their utility bills. Inflation is again taking hold with petrol and insurance costs rising rapidly. Increased taxation, levies and fees are placing a growing strain on family incomes. We are in the midst of an income crisis and not just a debt crisis. Families who are most affected need the laws to protect them. We must act immediately. The Law Reform Commission recommendations give us in this House the means to act and we cannot delay.

A revised code of conduct on mortgage arrears, which came into effect on 1 January, enhances the protection afforded to those in arrears or pre-arrears. It is most important that borrowers engage early with their lenders to benefit from the protection afforded under this revised code. The Government and the Central Bank should give extensive media coverage to this code and we should act immediately.

Deputy Ciarán Lynch recognised that at least this motion is a valuable one, which is in contrast to his few colleagues who bothered to speak on this worthwhile and compassionate debate addressing the issue of thousands of our citizens losing their homes and finding themselves in distress and despair. I refer to the trauma that has been and is still being inflicted upon many of our citizens, beaten and bludgeoned by the antics of uncaring lending institutions and the previous uncaring Fianna Fáil-Green Party Government.

Deputy Buttimer spoke about bringing the banking system back to health. Last night we had a debate on suicide and the Government should listen to what institutions are saying about recession depression and the number of people being driven to suicide because of the antics of the lending institutions.

It is not the banks that need to be brought back to health but the ordinary, everyday working people who are affected by what the banks have done. Many of those losing their homes who have mounting debts and are suffering from depression are looking to this Parliament for hope. However, I do not see much hope in the document presented to us last night by the Government.

We are looking for alternatives. In this regard, we need to force banks to renegotiate. This would stop the evictions. Since we now control the banks, why can we not force them to renegotiate? If one runs into debt with a city council or credit union, one can renegotiate one's loan to reflect the money one is earning. This is what we must force the banks to do.

The so-called moratorium will not work because the banks are ruthless. They are still lying to us about payments they made to some of their staff. Banks are already forcing people to give up their homes voluntarily. When I was in Waterford last week, I met a girl who did shift work in a big company in Waterford, Bausch and Lomb. She finished her shift at 8 p.m., at which time I met her with her father. She had a letter from her bank — one's bitter enemy would not send it to one — because she was in arrears by €1,200. The bank more or less told her she could lose her home and be mentioned in debt magazines. This is what the banks are doing this week and will continue to do. Does the Government think it can stop them by asking them for a moratorium for two years?

Let me refer to the document presented to us last night by the Minister. It states lenders are required to set up an arrears support unit to assess arrears and pre-arrears cases. The support unit will involve the same individuals in the banks who are putting people out on the streets after having taken their houses from them. Does the Government not realise this? The document also states that if a borrower agrees an alternative payment arrangement for his or her mortgage with his or her lender and continues to meet the revised payments, the lender cannot start legal action against him or her or seek repossession. That is not forcing the banks to do anything because the ones who will be calling mortgage-holders to make the new arrangements are the same people with whom the mortgage-holders have dealt heretofore. The banks have been doing this for the past five years and are making no agreements; they are just forcing people out of their houses.

With regard to local authorities, the document states people losing their homes can remain in their property until appropriate alternative accommodation is found. Is the Government out of touch with reality? Does it not understand 60,000 people are on local authority housing waiting lists? A couple who lose their home in Waterford could have to wait three or four years for a house. Will the Government state to those affected that they should stay in their houses which will not be taken from them at all? It should at least be honest about the matter. It should not put the onus on local authorities to rehouse people because they will not be able to do it. There are not enough houses being built and there are too many on the housing lists.

We must receive a commitment from the banks that they will renegotiate loans and, as my colleague stated, retrospectively revalue the houses valued during the boom, thus lowering mortgage values. Nothing else will work for those who do not have sufficient funds. We must instruct the banks to renegotiate loans; that is what will keep people in their houses.

The essential and big question everybody in the country is asking is, "Where is the bailout for the people?" There is a bailout for the bankers to the tune of over €100 billion but ordinary people who sought to do nothing more than put a roof over their heads — an entirely legitimate aspiration — are threatened with losing their homes and battered with unsustainable interest payments on inflated mortgages. The mortgages were inflated because of the reckless lending of the bankers and the reckless greed driven policies of Fianna Fáil, the EU authorities which did nothing to address what the bankers were doing, the developers, etc.

As with every problem we are facing, it is not those who are guilty and caused the crisis who are being asked to pay but those who are innocent, had nothing to do with causing it, cannot afford to pay and struggling to make ends meet. There is no bailout for them, nor is there a State guarantee or guaranteed protection, yet there are guarantees, bailouts and State protections to the nth degree for the bankers and institutions which caused the crisis. They stoked and pumped up the unsustainable bubble for no reason other than greed. If one is greedy, one's greed is insatiable and one is willing to do the most reckless things, one will be bailed out and protected. If, however, one is somebody who just wants to put a roof over one's head, tough luck. All the State will do is ask the institutions which caused the crisis to offer some forbearance and, at best, a little breathing space. However, as Deputy John Halligan stated, the banks actually keep threatening people and putting the pressure on them.

I am sorry the Minister is not present. The essence of this issue is summed up in the Orwellian doublethink of the Minister's speech thereon: "A key objective for the Government is to strengthen overall fiscal sustainability [of the State] by separating bank risk from sovereign risk." We are doing the exact opposite. The Government is welding the private gambling debts of the banks onto the backs of citizens of the State. It is what the last Government did and the Government is stating it will continue to do. As a consequence, people will lose their homes and are being screwed to the walls with debts they cannot afford to pay through no fault of their own. The Government will not issue the same guarantee it is giving to the banks to ordinary people who are fighting to keep a roof over their heads and make ends meet. In the process, the Government is crippling the economy because even those who can just about meet their mortgage repayments have no spending power left to fuel economic growth and meet the required domestic demand.

What is the alternative? The Government states there is none. The first alternative is to determine the principles that will guide our actions. The principle that must guide our actions is that the people, the innocent, should come first. Their right to a home should come before the right of the banks to be recapitalised, make profit and protect themselves, given that it is the banks which caused the problem. Let us not forget that those who are being threatened with having their homes taken from them and cannot meet interest repayments are the very people who have bailed out the banks. This is because of levies and pay cuts. The least we can ask for, given all the money that has been put into the banks and that the people now constitute the majority shareholder in the banks, is that the banks do not take people's homes from them and write down debts to levels that reflect the real values of properties during the bubble that was stoked up by the bankers and developers. In this way, debts could become sustainable and people could pay back their loans. Ultimately, it would save money for the State.

It is a loss-making exercise for banks to have to foreclose on loans and sell off homes at rock bottom prices, as they are doing. It is madness. Will the Government, please, do something about this and bring to an end the circumstances where it only bails out banks rather than ordinary people?

It is clear from the statements made so far that there is much in common between the concerns expressed by Members of the Technical Group about the plight of ordinary homeowners facing the challenges of making ends meet and honouring their mortgage commitments in the current economic climate and the sentiments expressed in the programme for Government on this issue. Nevertheless, I will refer to some key issues raised by the Deputies in the course of the debate to ensure the House understands the constraints and challenges facing the Government in addressing these issues.

It is important to keep a perspective on the extent of the impact of the issues raised in the debate, as solutions come with a cost at a time when the Government is committed to major reductions in public spending and when tax revenues are down. In that context, I note that Deputy Pringle is forecasting that wholesale repossessions are about to happen. The Government shares his concern, particularly for individuals unable to meet their mortgage repayments and who are facing possible repossession of their home. However, repossessions remain low and both the overall statistics and anecdotal material from some of the banks indicate that a significant number of those who fall into arrears manage to rectify the situation. In short, the system we now have is working reasonably well.

It is worth noting that repossession orders granted by the courts do not necessarily lead to homes being repossessed. When a repossession order is granted, homeowners can still work with their lenders in exploring alternative repayment measures, such as those outlined in the code of conduct on mortgage arrears, CCMA. Mainstream lenders, and particularly those benefiting from the State guarantee, have been very reluctant to take the route of enforcing repossession. The total figure for legal repossession of owner occupied homes by institutions covered by the Government guarantee for 2010 was 50, which is extremely low when compared to the UK and other jurisdictions. While I accept it may well be 50 too many, it is a fact that repossessions even happen in good times. It is also important to note that many repossessions involve mortgages taken out with the so-called sub-prime lenders, whose market consists mainly of borrowers in the higher risk category, many of whom would have been turned down for loans by the main lending institutions.

It is easy to understand why, for many, the solution to relieving homeowners is some form of debt forgiveness, particularly for those, including myself, who bought family homes during the 2004 to 2007 period. There are arguments in support of such proposals, such as those presented by Deputies last night in the House. Such arguments point to the inequity of the burden placed on the taxpayer in bailing out the banks, the institutions which promoted loans with high loan to value ratios and approved mortgages beyond the limits of normal prudential guidelines at a time when house prices were clearly over-inflated. However, we must be clear that any form of debt forgiveness, whether in the form of a downward revaluation of homes and consequent reduction in mortgage for the home owners, as suggested by Deputy Daly, or a write-off of a portion of the mortgage by the lender, imposes costs on the economy and the taxpayer in an era of necessary cutbacks in public spending and when the sovereign debt is under daily scrutiny by the international markets. To put it simply — if we forgive debt, somebody must pay for it.

On the issue of mortgage interest supplement, Deputy Ó Cuív raised a valid point about the need for careful targeting of home owners most in need of financial assistance from the State and the role of the mortgage interest supplement scheme in addressing this need. This scheme allows individuals to be paid a mortgage interest supplement on a discretionary basis where the amount of mortgage interest payable by the claimant is in excess of the amount that is considered to be reasonable to meet their residential needs. At the end of April 2011, there are 18,569 persons currently in receipt of mortgage interest supplement.

Deputy Daly and other Members referred to the need for the Government to intervene as the major shareholder in the guaranteed banks to prevent them from raising the variable interest rates, which are a source of further pressure on already hard-pressed mortgage borrowers. The Deputy will appreciate that it is important a balance is achieved by the Government between influencing the banks through the bank guarantee scheme and other financial support incentives, while at the same time being seen to have a hands-off approach to the daily running of these institutions, which must operate on a strictly commercial basis. Ireland had very low mortgage rates in recent times, but it is clear that this is coming to an end for both owner-occupier and commercial mortgage holders.

The Government is very aware of the difficulties facing some home owners and shares many of the concerns expressed in the motion by the Members of the Technical Group. Indeed, it is a welcome and constructive motion. It is very important that this nation gets things right and is seen to follow sensible courses of action. Through the proposal contained in the programme for Government along with implementation of recommendations in the final report by the Cooney group, including the mortgage interest supplement and other measures, the Government is taking the appropriate courses of action to provide effective support to home owners who find themselves in difficulty. While I have great sympathy with many of the arguments put forward by Members towards helping people who are under pressure, the situation in which we find ourselves is such that in trying to help those people, we could well end up punishing the taxpayer and, believe me, the taxpayer has had enough.

The debate about how we get people other than taxpayers to pay for our banking debt is one that will ultimately be resolved at European level. This Government is working tirelessly on a diplomatic level to generate political support in Europe for a more positive solution to the bank debt that does not disadvantage the taxpayer.

I commend Deputy Pringle on putting this motion before the House. I expected it to receive more support because after canvassing my constituency I believed there was a problem. However, according to the Government speakers yesterday, it is only a minor problem. What harm is it if one ends up in court and one's house is not taken? One is standing in the court with one's children, in front of reporters from one's local newspaper and potentially going to lose one's house, but the attitude is that one might not lose it and it is not that bad after all. If one loses one's house, it will be hell and if one must worry about losing one's house, it will also be hell. It will slow the person down, make them less beneficial to society and will do nobody any good. It will cause more rows and stress in the home and more psychological problems, but the reaction is: "What harm is it when some might not actually lose the house? They will only be dragged through the courts."

I often said in the last few weeks that I could not understand who is and is not a socialist, but at this stage I know who is not a socialist. The Members on the other side of the House are not socialist. One does not talk about there being some type of moral hazard in an individual defaulting on their debt while simultaneously believing there is no problem with a bank offering money to people it knows could never repay it if anything went wrong. Deputy Wallace gave an interesting insight last night into the potential percentage of people who might have to default on their mortgages. We cannot be sure this will be the case but it is an interesting indicator.

The Irish League of Credit Unions, however, gave a more interesting and strong hint of what is coming down the line. It said that 21% of people in this country, or 735,000, have €70 per month after they pay for everything. Will they be all right in the next couple of years after they pay the new water charges that will be introduced and the new housing tax to be imposed on us by our friends in Europe and the IMF? Our friends in Europe are also talking about increasing interest rates by 1% or, in their language, 100 basis points. That is only another €1,000 gone from one's income. If one lives in a rural area, there will be a septic tank tax which, presumably, will not be a problem. One will be able to pay that, as well as the insurance levy.

The Tuam Herald today reports that a new EU directive is due to be introduced, which we will swallow hook, line and sinker because the EU runs this country. Apparently, the EU will force farmers to pay the same rate of tax on agricultural diesel as is paid on motoring diesel. This means they will have even less money. Yet, with all this and, perhaps, many other things we do not yet know about coming down the line, the Government is saying it will not be a problem.

As somebody who got a small mortgage to buy a relatively small house, part of me is uncomfortable with the fact that I might be paying for somebody who bought a big house. Perhaps they should have been smarter and not done that. The reality, however, is that we do not have a choice. We either deal with it now or later when, like the banking debt, it will fall on us like a tonne of bricks. We will have to deal with it one way or the other.

I heard somebody say yesterday that it would require further recapitalisation. I understood a stress test had been carried out on the banks. One does not need to be a mathematical genius to understand that if one is carrying out a stress test on the banks, one should take account of the fact that people might default on their mortgages. In fact, it is almost definite that the latter will happen. Therefore, in stress testing the banks, one should include recapitalising them in respect of the potential losses to which I refer. Obviously, however, the Government did not believe that this was going to happen or that it was a worst case scenario.

When one considers the Government amendment to the motion, it becomes clear who, along with the EU, is running the country. It is being run by civil servants. I am convinced that the individual who drafted the amendment is the same one who used to draft amendments for the previous Minister for Finance. Apparently, the difficulties in which we find ourselves are not the fault of Fianna Fáil or the previous Government of which it was a part. Our problems are due, it seems, to the worldwide financial crisis. It did not take those opposite long to turn into the same beasts — and they were beasts — as those who served in government before them. They should be ashamed of themselves.

This motion was intended to place on the agenda a very serious issue with which many thousands of households and those in the wider community are faced. A generational issue arises in respect of this matter. Those who purchased at the top of the housing bubble have tended to be those in their mid-20s to mid-30s who were beginning to have families. It is they who are most in crisis. They are also seeking to cope with the consequences of huge personal debts in addition to their mortgage debts, and they are often trapped in inappropriate accommodation such as small apartments. Accommodation of this type might have been fine for individuals or couples. When babies arrive, however, as they have done in abundance in recent years, accommodation such as that to which I refer is inappropriate. It is also impossible for those in negative equity to get out of this type of accommodation. In conjunction with all this, we must deal with the problem of unfinished and ghost housing estates.

Entire housing estates and communities are struggling with the impact of the current crisis. It has too often been necessary for communities to put in place social supports in their areas. The mighty markets are not prepared to invest in such areas. There is a social cost to this problem which has not yet been calculated. For example, the matching funds for our so-called free education system will be impossible to deliver in areas where there is a concentration of mortgage debt and where there is no possibility of movement as a result of negative equity. Gone will be the ability to raise funds, run sporting clubs and other community organisations. Unfortunately, this is all very predictable.

The Law Reform Commission's report on personal debt management estimated a ratio of household debt to disposable income of 48% in 1995. This reached 176% in 2009. In the current economic climate, with almost 500,000 people unemployed and at a time when there are continual income shocks, the level of personal debt is simply not sustainable. In the section of its report on debt enforcement, the commission argues that a more holistic approach must be taken, with a minimum threshold of disposable income retained to sustain individuals and their dependants.

The commission is also seeking a debt management system to operate outside the courts system. Will its recommendation in this regard be implemented? If it is implemented, how quickly will this be done? If it is not forthcoming in the immediate future, the courts system will become clogged up as a result, as Deputy Luke ‘Ming' Flanagan stated, of people being dragged through them.

It appears the only recommendations that have been introduced are at lender level. There is much to be done in the context of introducing new laws and ramping up the powers of the relevant agencies in order that we might have an adequate system which will give people a degree of certainty. It is interesting to note that when a person robs a bank or when a bank robs a nation, the legal bill falls to the taxpayer. When an individual faces proceedings which do not include imprisonment, however, there is no legal aid available to them. Will the Law Reform Commission's recommendation in this regard be implemented? If it is, will serious resources be invested in the free legal aid scheme? The position with regard to the money advice and budgeting service, MABS, is similar. There are recommendations that this should either be ramped up or transformed into a debt agency. When is that going to happen? Will MABS have the resources necessary to allow it to deal with the problem?

From the Central Bank's analysis, it appears that 45,000 mortgages have been rescheduled and that there is an overlap between these and the mortgages which are in arrears. The Central Bank estimates, therefore, that some 70,000 mortgages are either in arrears or have been rescheduled. The Cooney report into mortgage debt recommended a more equitable approach in respect of the mortgage interest supplement. We are all aware that there is a poverty trap in this area because if one person in the household is unemployed, then the supplement is not payable.

In the case of the deferred interest scheme, the real question will arise where a mortgage is deemed to be unsustainable and where a housing need still exists. The Cooney report states that in such cases the occupant should be eligible for a housing assessment. There is no point in carrying out such an assessment when there are no houses to be delivered. We are all aware of the position with regard to local authority housing lists. A large additional workload is going to be placed on local authorities without the provision of extra resources, even at administrative level. The sourcing of new houses under the rental accommodation scheme is hugely time consuming. The Department of the Environment, Community and Local Government must indicate how it is intended to deal with this matter.

We will be obliged to pay the cost for all of this because if people are evicted, they will have to be rehoused by the State because they will not be in a position to obtain new mortgages. Essentially, all we are doing is kicking the can down the road. Debt forgiveness is the only solution that will be available to some households. That is the challenge we must face up to.

I was deeply disappointed by the Minister's contribution. It appears that in respect of this problem all the Government has to offer is concern and sympathy. That really is not good enough for those who are affected by negative equity and by the extraordinary debts they have incurred as a result of the mortgages they took on. If the Minister is not taking the figures seriously, then he should begin to do so. As Deputy Boyd Barrett stated, the scale of this problem symbolises what the banks have done to this country.

Is the Minister aware that the ESRI has indicated that by the end of this year some 200,000 households will be in negative equity? There are at least 40,000 people who are already in arrears on their mortgage repayments. The average person in negative equity owes almost €40,000 on his or her house at this stage. With property prices continuing to fall, the problem is going to become greater.

A previous speaker referred to the knock-on effects of mortgage debt. People in negative equity do not spend money, rather they save it because they feel insecure. The knock-on effect of this on consumer spending is enormous. This is a monumental problem which the Government has failed to recognise. The amendment it has tabled is a kind of sticking plaster affair that refers to mortgage schemes and the provision of a few subsidies here and a few supplements there. What the Government envisages will not resolve the problem of the massive number of people who are trapped in their homes as a result of negative equity. These individuals cannot move upwards or downwards on the property ladder and the entire market freezes as a result.

What are we going to do about mortgage debt? There are those who have stated that we, the proposers of this motion, have not put forward any solutions. I suggest that we are thinking exactly the wrong way about what is happening. Why do we not adopt the mantra that the lender must take at least equal responsibility in respect of mortgages as that taken by borrowers? It is as simple as that. If one says that the bank, building society or institution which is lending the money has a responsibility, all one is doing is extending the thinking that has been applied to those overseas who lent money to Anglo Irish Bank and stating that the lender has a responsibility in this regard because the lender has been lending recklessly. If one accepts that the banks have responsibility in this regard, one must then state that this responsibility must be shared. How can it be shared?

I do not know if the Minister has ever considered the idea of a debt for equity swap between the bankers and the lenders. This concept has been extended in the corporate world. It has also been suggested in respect of the foreign banks, Anglo Irish Bank, AIB and Bank of Ireland. It is a simple idea which involves the swapping of debt for equity. What happens is that instead of not receiving any payments because the borrower is not in a position to repay, the bank which lends the money receives equity. In this way, the bank must accept responsibility for the decision it took when it lent the money in the first instance. Such a bank would have taken a decision to lend on a security which is devaluing. At present, banks are not facing any risks and enjoy all the legal protections one could possibly envisage. In other words, the lenders are taking no risk and the borrowers are taking all of it.

The Deputy has one minute remaining.

Thank you. Why not enforce a system whereby the bankers who lent the money have to accept that they also have a stake in the equity, and if they overlent, they take equity instead of debt? If the equity is worth less, then that is their problem. They made a bad decision as well, and the borrower has suffered enough. Why not also look at the possibility whereby a borrower who cannot pay the money back can hand the keys over to the bank and call it quits? The borrower must accept that he no longer has an equity interest in the house because he cannot pay back the bank, but the bank then has the keys and it has the responsibility. The borrower can then walk away, having suffered for making a bad decision, but also sharing that particular problem with the bank, which will also take a hit. At the moment, it is all one way for some reason.

I am asking the Government not to offer us a list of sticking plaster solutions that will not actually tackle the problem at all. I am asking the Government to look at this in a way that will tackle it fundamentally because the scale of the problem demands it. I commend my colleagues for putting down this motion and for putting it on the agenda. I am utterly dispirited by the fact that the Government is offering sympathy, cups of tea and concern, but no radical thinking on a problem that will haunt us for years to come.

Amendment put.
The Dáil divided: Tá, 94; Níl, 46.

  • Bannon, James.
  • Barry, Tom.
  • Breen, Pat.
  • Broughan, Thomas P.
  • Bruton, Richard.
  • Buttimer, Jerry.
  • Carey, Joe.
  • Coffey, Paudie.
  • Collins, Áine.
  • Conaghan, Michael.
  • Conlan, Seán.
  • Connaughton, Paul J.
  • Conway, Ciara.
  • Coonan, Noel.
  • Corcoran Kennedy, Marcella.
  • Costello, Joe.
  • Coveney, Simon.
  • Creed, Michael.
  • Daly, Jim.
  • Deenihan, Jimmy.
  • Deering, Pat.
  • Doherty, Regina.
  • Donohoe, Paschal.
  • Dowds, Robert.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Farrell, Alan.
  • Feighan, Frank.
  • Ferris, Anne.
  • Fitzgerald, Frances.
  • Fitzpatrick, Peter.
  • Flanagan, Charles.
  • Flanagan, Terence.
  • Gilmore, Eamon.
  • Griffin, Brendan.
  • Hannigan, Dominic.
  • Harrington, Noel.
  • Harris, Simon.
  • Hayes, Tom.
  • Howlin, Brendan.
  • Humphreys, Heather.
  • Humphreys, Kevin.
  • Keating, Derek.
  • Keaveney, Colm.
  • Kehoe, Paul.
  • Kelly, Alan.
  • Kenny, Seán.
  • Kyne, Seán.
  • Lynch, Ciarán.
  • Lyons, John.
  • McCarthy, Michael.
  • McEntee, Shane.
  • McFadden, Nicky.
  • McGinley, Dinny.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • McNamara, Michael.
  • Maloney, Eamonn.
  • Mathews, Peter.
  • Mitchell, Olivia.
  • Mitchell O’Connor, Mary.
  • Mulherin, Michelle.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Nash, Gerald.
  • Naughten, Denis.
  • Neville, Dan.
  • Nolan, Derek.
  • Noonan, Michael.
  • Ó Ríordáin, Aodhán.
  • O’Donnell, Kieran.
  • O’Donovan, Patrick.
  • O’Dowd, Fergus.
  • O’Mahony, John.
  • O’Reilly, Joe.
  • O’Sullivan, Jan.
  • Phelan, Ann.
  • Phelan, John Paul.
  • Rabbitte, Pat.
  • Reilly, James.
  • Ring, Michael.
  • Ryan, Brendan.
  • Sherlock, Sean.
  • Shortall, Róisín.
  • Spring, Arthur.
  • Stagg, Emmet.
  • Stanton, David.
  • Timmins, Billy.
  • Tuffy, Joanna.
  • Twomey, Liam.
  • Varadkar, Leo.
  • Walsh, Brian.
  • White, Alex.


  • Boyd Barrett, Richard.
  • Browne, John.
  • Calleary, Dara.
  • Collins, Joan.
  • Collins, Niall.
  • Colreavy, Michael.
  • Cowen, Barry.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Donnelly, Stephen.
  • Dooley, Timmy.
  • Ellis, Dessie.
  • Ferris, Martin.
  • Flanagan, Luke ‘Ming’.
  • Fleming, Sean.
  • Fleming, Tom.
  • Grealish, Noel.
  • Halligan, John.
  • Healy, Seamus.
  • Higgins, Joe.
  • Kelleher, Billy.
  • Kirk, Seamus.
  • Kitt, Michael P.
  • Lowry, Michael.
  • Mac Lochlainn, Pádraig.
  • McConalogue, Charlie.
  • McDonald, Mary Lou.
  • McGrath, Finian.
  • McGrath, Mattie.
  • McGrath, Michael.
  • McGuinness, John.
  • McLellan, Sandra.
  • Moynihan, Michael.
  • Murphy, Catherine.
  • Ó Caoláin, Caoimhghín.
  • Ó Fearghaíl, Seán.
  • Ó Snodaigh, Aengus.
  • O’Brien, Jonathan.
  • O’Sullivan, Maureen.
  • Pringle, Thomas.
  • Ross, Shane.
  • Smith, Brendan.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.
Tellers: Tá, Deputies Paul Kehoe and Emmet Stagg; Níl, Deputies Aengus Ó Snodaigh and Catherine Murphy.
Amendment declared carried.
Motion, as amended, put and declared carried.