Deputy Jim Daly was in possession. There are 15 minutes remaining and I understand the Deputy is giving five minutes to Deputy John Paul Phelan.
Land and Conveyancing Law Reform Bill 2013: Second Stage (Resumed)
This Bill is not about assisting banks to repossess family homes. It is about rectifying a flaw identified in current legislation that prevents banks exercising their full right to recall security pledged by the borrower in the event of default beyond sustainable solutions. Investment properties will and should be repossessed by banks. Developers are pocketing cash from rent in many cases. That is taking cash directly from the pockets of the taxpayer.
Some of the arguments against this measure miss the key point. The flaw identified does not protect family homes from being repossessed. That element is protected under the Code of Conduct for Mortgage Arrears. We cannot rely on a flaw in legislation to do that and to suggest otherwise is disingenuous. Further protection is offered by the personal insolvency legislation.
This issue requires leadership from politicians and not some fairy tale sympathy. Some of the reports at the weekend from a certain Ard-Fheis were regrettable in that people tried to make a political football out of this issue. They frightened home owners by saying the Government through this legislation was pushing the banks to remove people from their family homes.
I regret that people have chosen to play politics with this, which indicates further spin coming from some - not all - quarters on these very sensitive issues. It is easy to play on the vulnerabilities of people under financial pressure. It is akin to the argument that there should be an independent office to judge who should repay money to the banks. Having such an office - I have referred to it as An Bord Pleanála-style office - where somebody independently adjudicates whether Deputy Jim Daly should repay money to the bank would not only undermine the banking system, but it would bring it to a halt as no commercial bank would lend into the real economy. We all agree the banks must lend into the real economy. They would not lend into the real economy if an independent-style office, outside everybody else's control, adjudicates on whether people should pay back.
The Bill is another step in restoring the property market. It needs to hit the floor and we need to get to the real value of properties as they are. Anything that falsely prevents that from happening is a hindrance to the recovery of the country. I wholeheartedly support the legislation and look forward to its implementation.
The legislation obviously stems from the Start Mortgages High Court judgment a number of months ago. While that case is still under appeal, it identified a gap in the law that was adopted by the previous Dáil on land and conveyancing. That was major legislation, which attempted to codify and update several Acts dealing with property and the conveyancing of property. When debating it in the other House, I remember the then Minister speaking about the area of repossessions that this Bill seeks to rectify. It was the intention of the previous Government that the law as it stood in the area of repossessions would continue to remain on the Statute Book, which is why it is ironic to listen now to some from that same quarter say that they are opposed to what they introduced four or five years ago.
Along with filling that gap in the law, the Bill allows for certain measures to be taken in compliance with the Personal Insolvency Act, which we passed a few months ago. This would allow an intervention between the borrower and lender to try to ensure that the parties could enter some sort of arrangement under the personal insolvency arrangement if both are agreeable. That is a necessary provision given that the law on insolvency has changed since the original legislation in 2009.
I take this opportunity to raise a number of reasonable suggestions made by the Free Legal Advice Centres. I suspect I was not the only Deputy to receive their e-mail because any e-mail that starts with "Dear Deputy" - of which I have received many hundreds in recent days - tends to be one that might have gone to other people as well. In this context they suggested that the Government consider including certain provisions in the legislation.
The Bill as published proposes a two-month adjournment to allow people to explore the personal insolvency arrangement and they suggest it is too short and should be from four to six months. I believe that two months, or eight weeks, is too brief. The Minister should consider extending that eight-week period to at least double that length. This should certainly apply in the case of people in jeopardy of losing their family home, of whom Members on all sides will have met many in recent years. The same should also apply to people with investment properties who may be in a position to enter an arrangement with their bank. That two-month period should be extended further, perhaps later in the legislation.
They also, rather reasonably, suggest an amendment in the case of repossessing a family home to ensure the lender has fully complied with all steps of the Central Bank's code of conduct in that area. Perhaps the Minister might be able to include such an amendment on Committee Stage.
They also suggest that the level of legal and financial support offered to borrowers in distress is not sufficient. I am sure many Members of this House have provided information to borrowers who are in trouble. The Free Legal Advice Centres have suggested that more support for MABS and the legal aid board is required in order to deal with the glut of people in difficulty at present. I do not believe that is particularly cumbersome and perhaps the Minister could include it on Committee Stage.
It goes without saying that repossessions should be the very last resort in cases of mortgage default or mortgage arrears. However, to be a last resort a measure must actually be possible. An unintended consequence of the Land and Conveyancing Law Reform Act 2009 has prevented repossession from being the last and final option for financial institutions. This became apparent as a result of a High Court case, which I believe is currently on appeal to the Supreme Court, involving a non-traditional mortgage lender. With the current events in our political system, this is another reminder of the centrality of the courts in our legislative system and an indication of the pervasiveness of judicial decisions.
It is very likely that this Bill will be vociferously opposed by the Opposition and will be portrayed in an incorrect light. Without doubt legislation must always be carefully constructed and rigorously analysed. This ought to be the aim. At times, however, unforeseen developments can emerge which need to be addressed. The Bill will rectify an unintended consequence of legislation and restore the previous position.
Furthermore, the Bill introduces a new provision to enable a court to adjourn repossession proceedings and seek an examination to determine whether the personal insolvency arrangement can be utilised. As Members will be aware, the personal insolvency arrangement is a new remedy available to heavily over-indebted people and is a non-judicial alternative to bankruptcy. It has been specifically designed to better handle large debts such as those associated with mortgages.
We must recognise, despite our hopes to the contrary, that some mortgages are simply unsustainable. Whether they should have been approved by the financial institution or whether the applicant should have applied for a mortgage in the first place are irrelevant factors. The unfortunate fact is that some mortgages are unsustainable and will probably never be repaid in full.
With this in mind it is important to consider what will happen if a financial institution is unable by law to seek repossession of a property purchased with a mortgage. There is a real danger that some unscrupulous people would adopt a laissez-faire attitude towards meeting their financial commitments. This would in turn endanger the stability of the financial institutions and possibly require further intervention and investment at the expense of the taxpayers.
The focus of the Bill must be the same as that with the personal insolvency legislation which radically overhauled our personal debt laws. The emphasis must be on differentiating between those who will not pay and those who cannot pay - of whom, unfortunately, there are too many - and in concentrating solutions on those citizens who cannot meet their mortgage repayments but are making genuine efforts to do so.
The Government has correctly committed to a number of actions to address the mortgage arrears problem including providing advice, information and guidance to people in arrears; reforming our personal insolvency legislation; requiring the financial institutions to develop and implement operational plans for addressing mortgage arrears; and updating the Central Bank's code of conduct on mortgage arrears which protects borrowers.
Today, the Free Legal Advice Centres, FLAC, published its analysis of the Bill which contains a number of sensible, common-sense suggestions which will maintain and-or increase protection for borrowers in advance of the re-introduction of repossession mechanisms. A requirement that a lender seeking repossession fully complies with all steps of the Central Bank's code of conduct on mortgage arrears is a very welcome suggestion. It would make no sense at all for a court to allow a lender to secure a repossession order if this same lender had not bothered to comply with the Central Bank's regulations.
Another suggestion with which I agree, and I urge the Minister to consider it seriously, is to extend the time permitted for exploring the personal insolvency arrangement option from two months to between four and six months. A personal insolvency arrangement is a significant undertaking and should not be entered into lightly. Therefore it is vital that time and space are afforded to all concerned parties.
While it is often quoted that ignorance of the law is no defence, I concur with the concern of FLAC and others that there exists an inadequate and incomplete source of advice and information for borrowers who find themselves in financial difficulties or mortgage arrears. To be clear, MABS and other organisations provide an exceptional service to people, providing advice, information and support. However, I am concerned by the pressure on these organisations which are experiencing unprecedented levels of demand for their services. I appeal to the Minister to enhance the State resources available for MABS. If a person is aware of all the facts, obligations, rules, requirements and regulations from the very outset it will benefit all concerned and will reduce costs, both economic and social, that may arise if financial difficulties emerge.
While I appreciate and understand why the Bill is being introduced, and I agree that repossession has to be part and parcel of a normal, properly functioning financial system, we must also ensure that genuine, honest borrowers receive all the support necessary to navigate their way out of their financial difficulties.
I will share time with my colleague, Deputy Pearse Doherty.
Yesterday, on introducing this legislation, the Minister for Justice and Equality told the Dáil it is necessary that our legal system provides, and is seen to provide, processes which work properly to give effect to a lender's age-old right to repossess where there is serious default. To reinforce his point, the Minister, Deputy Shatter, reminded Members that when introducing the original land and conveyancing law Bill, Fianna Fáil clearly determined that the repossession arrangements which had existed for centuries should remain in place. Both Fianna Fáil and Fine Gael are at one in their shared commitment in ensuring this so-called age-old right of financial institutions is guaranteed above all else. There is no real surprise there as Fine Gael and Fianna Fáil are cut from the same cloth.
Deputy Micheál Martin was to the fore in Fianna Fáil's decision to sign up to the troika deal. He was the man who agreed to a property tax, a water tax, cuts to Garda numbers and massive reductions in public sector numbers and public sector pay. I could go on. Deputy Micheál Martin championed every regressive step his Government took, but only after he and his colleagues had brought this State to its knees. Fine Gael, having been elected by the people on the promise of reform, decided instead simply to implement Deputy Martin's austerity agenda, where private finance trumps the public interest every time. And what of the Labour Party? What happened to the aspirations of the democratic programme, which affirmed that all right to private property must be subordinated to the public right and interest? What would Tom Johnson think of the Labour Party now? Doing all it can to ensure families stay in their homes and have sufficient resources to care for their children should be the number one priority of the Government, and the Labour Party in particular.
It is fair to say this legislation merely deals with an unplanned loophole. However, it is this anomaly which has kept families in their homes during a crisis that has yet to abate. This unforeseen loophole has protected pre-December 2009 home owners from the financial sector's most aggressive tactics and has prevented banks seeking unjust repossessions. Let us be clear about the very simple objective of this legislation. This so-called tidying-up exercise achieves one simple goal, which is that the Government is making it easier for the banks to repossess family homes. The pattern continues, as Fianna Fáil devised the plan, leaving Fine Gael and the Labour Party to implement it. Of course, this legislation cannot be viewed in isolation. It is part and parcel of a Government strategy which hands back the State's limited power to protect family homes from the financial sector. Once upon a time banks gaveth through reckless lending and now they will taketh away with punitive repossessions.
One in four family homes is in mortgage distress. This amounts to 198,000 homes, with hundreds of thousands of parents and children living day in, day out under a cloud of anxiety and fear. Unemployment remains high. The Government, which is the State's biggest employer, has already shed 30,000 jobs and plans to cut another 10,000 over the coming years. Health, education and social protection services, the very services low-income families rely on simply to get by, are being slashed with every quarterly budget review. The long-awaited personal insolvency scheme of Fine Gael and the Labour Party does not offer the type of protections necessary to shield families from unfair banking practices and, more importantly, neither does it protect the wider public good. When and if a family is forced out of its home, it might well benefit private finance, but the State will pick up the tab and the family will pick up the pieces of its broken hopes and dreams.
Sinn Féin submitted a significant number of constructive and progressive amendments to the personal insolvency scheme. Our amendments made business sense for banks and offered sensible protections for families and individuals. We argued very strongly against the bank veto because there is no incentive for banks to engage with the personal insolvency process in a fair and reasonable manner in advance of repossession. The code of conduct works against the mortgage holder and there are clearly insufficient protections for families experiencing severe mortgage distress. In addition, there is not sufficient scope in the legislation for the courts to assess whether the banks are acting reasonably or responsibly.
Sinn Féin has called for an independent body to force banks to accept reasonable arrangements on a case-by-case basis. We have real concerns about the role of the personal insolvency practitioners. Yesterday, when speaking on the legislation, my colleague, Deputy Pádraig Mac Lochlainn, set out our concerns that by choosing the private sector route, personal insolvency practitioners will cherry-pick the cases with greater opportunities to make money, meaning those in greatest need will be left to fend for themselves. It is our strong view that MABS should have been the appointed practitioner. It is a respected mediator of long standing and, critically, it is trusted. MABS has an established network and is, in real terms, best placed to work with citizens experiencing debt distress.
Women, particularly single women with children, will continue to be among those citizens worst affected. For decades Fianna Fáil, Fine Gael and Labour Party Governments have failed to deliver an affordable child care system. Women still disproportionately populate modestly paid work in the public and private sectors. A total of 91% of nurses are women, as are 88% of primary school teachers. Women make up 75% of clerical officers in the public service, who start off on a salary of €22,000. Lone parents are being forced back into the workplace when their children reach seven years of age, regardless of whether they can afford child care or not. Child benefit has been cut, affecting low and middle income families in particular.
Inequality is deepening under the watch of Fine Gael and the Labour Party.
In that regard, handing over the kind of powers to banks that Fianna Fáil, Fine Gael and Labour have decided on and are implementing will only make this very bad situation utterly unbearable for many citizens.
There is no doubt that Maura and Robert Gunn have done a huge service to many individuals who would have seen their family homes repossessed were it not for the case adjudicated upon by Ms Justice Dunne in July 2011. Many people refer to it as the Dunne judgment, but it should be called the Gunn judgment because of the individuals involved in the case against Start Mortgages at the time. That judgment was a relief for many families struggling to pay their mortgages. We know that it is not an ideal solution to rely on a loophole to protect the family home. Indeed, it has been said that the judgment let the Government off the hook and allowed them to get away with over a year of inaction.
It is unfortunate that we are now acting to remove the judgment's effect, but we are completely failing to provide the necessary safeguards for individuals and families. If this Bill was part of an overall solution to the mortgage crisis, I could try to understand the logic of where the Government was coming from. However, the facts are that this is part of a process of hanging struggling home owners out to dry. The banks were bailed out, stressed tested and capitalised at the expense of the taxpayer to deal with their impaired loans. Now, however, they are not being asked to play their role in resolving the crisis that they played a huge part in creating in the first place. Let us be clear that this Bill is about squeezing every last penny out of struggling families and then taking their homes from them at the end of that process. It is about scaring more than 180,000 households in mortgage distress and doing the banks' dirty work for them. It is about making repossessions part of life and creating a society where, once more, the banks rule and people suffer.
Last month, I made a submission on behalf of Sinn Féin to the Central Bank's review on the code of conduct on mortgage arrears. I pointed out in that submission that the review had been sought by the troika and in my view had a predetermined outcome. That outcome was to allow banks to put more pressure on those struggling to pay and to free their hand to repossess properties.
We are discussing a Bill which is the next step in the repossession dance. Sinn Féin will oppose the legislation for good reasons. In opposing it, we are also acknowledging that the Government has support to get this measure through the Dáil. We will, therefore, table a number of amendments which will protect the family home and give courts power to decide on the reasonableness of lenders' behaviour and to accept or reject that.
As it currently stands, this Bill is simply another sop to the banks. There is a general co-ordinated strategy to reduce the number in arrears, not by dealing with the core problems but by making evictions a fact of life in modern day Ireland. Since this Government came to power, the numbers in arrears have almost doubled, just like they did in the last 18 months of Fianna Fáil's rule. Now it seems there will be action at long last, but what type of action? The answer seems to be that it will be action to help the banks.
Once more, the interests of the banks are being put before society's interests. We know that this Government will not stand up for the people when bankers in State-supported banks pay themselves obscene salaries. We also know that it certainly will not stand up for the people when banks bully them with a secrecy clause in negotiations and other tactics that are being widely used.
The current situation is unsatisfactory. We need a new regime of laws and practices that protect the family home against repossession. We agree that relying on a loophole is bad law. However, as long as banks have the final say in the Personal Insolvency Act and as long as this Government will not force the banks to deal reasonably with people doing their best to pay their mortgages, then we will not support this move to make it easier to repossess the family home.
The Government should be clear that it is the Bill's intention to facilitate the repossession of family homes. That is not scare-mongering; it is a fact. I will not flinch from pointing out that such is the case. Sinn Féin has shown how a different approach is needed. We would protect the family home and empower an independent body to force banks into reasonable arrangements. This is part of our constructive solution. As the Bill is part of the Government's crumbling attitude to the banks we will use it to show how our positive alternatives to repossessions can lead to sustainable situations for many families and other sectors.
The Gunn judgment is the only protection that many households have. It is irresponsible for the Government to repeal it while not asking banks to play their part. We will move amendments to this Bill that will make it responsible. We want it to be part of the solution, not part of the problem. We will move amendments to this Bill to make it fairer and to protect the family home. That means changing the rules so that, for starters, citizens' names can be removed from the register after their application to the insolvency service.
We will insert a reasonableness test that courts can use as a guideline. This will empower sensible judges to protect the family home from aggressive, unreasonable banks. Such a test would take into account the code of conduct of mortgage arrears, how parties have behaved and the proposals made by the personal insolvency practitioner.
We would look at the potential problems in accessing a personal insolvency practitioner that some people may have. The Personal Insolvency Act is flawed in that a personal insolvency practitioner will be rewarded for taking on bigger cases, while excluding from the process smaller ones involving those struggling with debts. We will seek to extend the two-month period for which courts can adjourn a case to allow the personal insolvency to take place. The Personal Insolvency Act gives 70 days protection, yet this Bill would only give a 60 day adjournment period.
There should be a test that lenders have met the conditions of the Central Bank's code of conduct on mortgage arrears before they can move to repossess. Crucially, a lender should be required to outline to the courts the approach it will take to the residual debt in the case of a family home being repossessed.
Such amendments would move us some way towards making this Bill part of the solution. As it stands, we cannot support removing the last line of protection for the family home while banks are not being asked to contribute to the solution. We all know more than 180,000 households are in mortgage distress in this State. People in that situation are asking if the Bill is fair and whether it will improve things for them. The answer to both questions is "no".
This Bill is part of a co-ordinated plan to reduce on paper the numbers of those struggling with mortgages. It is a plan that could have, and to a large degree has, been written by the banks. It has no regard for social consequences. This is a plan to allow repossessions to be part of daily life in Ireland in 2013. The plan was hatched because the Government refuses to make banks play their part. Sinn Féin rejects this plan. Instead, we stand for the protection of family homes and making banks play their part in solving a mortgage crisis that they were part of creating. There is still time for the Government to do the same.
I wish to share time with Deputy Olivia Mitchell and Deputy Liam Twomey.
Is that agreed? Agreed.
The mortgage arrears situation is another mess inherited by this Government and one which the Government intends to deal with this year. There clearly is an epidemic of mortgage arrears, as previous speakers have stated. The property bust and the collapse of the Celtic tiger have led to a huge number of people losing their jobs and having difficulties in repaying their mortgages. Houses which once sold for €400,000 and more are now worth half that amount in some parts of the country. It is really disheartening for those home owners who have to continue making mortgage repayments on a property that is now worth half what they paid for it.
A few years ago people were being freely offered 100% mortgages by a large number of banks such as Bank of Scotland. The houses on which these mortgages were taken out are now worth less. People are repaying huge mortgages on a monthly basis and trapped in locations where they have lost jobs and, when they find a new job, they have a long commute to the new place of employment. Due to the downturn in the economy, the loss of jobs has contributed greatly to the stress and difficulty in paying a mortgage.
This Government recognises that the current loophole in the law is a further hindrance in the mortgage arrears crisis. This loophole came to light in the Start Mortgages v. Gunn case in 2011 where it was found that in certain cases mortgagees were being restricted from exercising their repossession rights. The Government is determined to address this matter and committed in the memorandum of understanding, agreed with the troika, to remove any unintended constraints on banks to realise the value of loan collateral under certain circumstances. In conjunction with the Personal Insolvency Act, which, for the first time, aims to provide options for those in debt, this change will make a big difference.
The Land and Conveyancing Law Reform Act 2009 was major legislation that reformed areas of land law, including ownership, trusts, co-ownership, conveyances and mortgages. The Bill simplified the land law and facilitated the introduction of e-conveyancing. Section 1 of this Bill will ensure the continued application of certain repealed and amended statutory provisions to mortgages created prior to 1 December 2009. Section 2 makes provision for the adjournment of court proceedings for repossession of a principal private residence to consider other options available under the Personal Insolvency Act. As Members, we all agree that house repossession must and should be the last course of action undertaken by banks when dealing with the debt situation. It is crucial that a clearly defined system is in place for future generations.
It has been noted that investment properties will be repossessed and that all efforts will be made to ensure family homes are not repossessed, where possible. Certainly there are many people who purchased second and third properties and who find themselves in extreme hardship and would be only too glad to see the back of some of the investment properties, but clearly not their principal private residence. That is why it is crucial that family homes are not repossessed. It is important that all avenues are exhausted to enable people to stay in their family homes and to agree a debt plan that enables them to do that.
The most recent statistics from the Central Bank on mortgage arrears show that there were 94,488 cases of mortgage arrears over 90 days on 31 March 2012. Although the number of mortgages in arrears have increased, the number of repossessions in this country are much lower compared with other countries. In the Republic, the rate of repossessions was 0.3% of total arrears cases in 2012, while in the US and the UK, the rate is between 3% and 5%. The banks have a hugely important role to play if the issue of mortgage arrears is to be dealt with and repossessions are to be avoided. The Central Bank has stipulated that banks should propose sustainable mortgage solutions for a sizeable number of distressed borrowers, and banks have been given targets of 20% of the loan book by June 2013, increasing to 50% by the end of this year. I am aware from discussions with some of the CEOs of the banks that they are determined to address this long-standing issue and ensure home owners are put on a more sustainable path in repaying their mortgages.
The Central Bank has set a target that the majority of distressed borrowers will have been given proposed solutions by their bank by the end of 2014. The Central Bank will monitor the rate at which each bank is addressing the issue and all information will be publicly disclosed. That is important, particularly in light of the serious problem the Government has inherited.
The measures outlined in the Bill will ensure that any further delay in economic recovery will be avoided as the revised system to be introduced will support Ireland's exit prospects and growth outlook. We need to ensure a balance is struck and every step is taken to ensure repossession of a family home is the last resort in addressing an individual's debt problems. The repossession of a family home has a significant negative impact on any family and should only be undertaken in very extreme circumstances.
Basically this is a technical Bill. I had not intended to speak on it but having heard the inexplicable response of the Opposition, I felt compelled to do so. For whatever reason, whether the Land and Conveyancing Law Reform Act 2009 was flawed as a result of an oversight or some other reason, the courts ruled that a saver in that legislation to do with repossessions and which came under the old legislation did not have the intended effect.. It was found that the saver did not apply. In the current climate that uncertainty in regard to repossessions could not be allowed to persist and, therefore, the Government is seeking to remove that uncertainty. That is all that is planned in the Bill. In effect, we are merely reinstating the law as it was pre-2009 and as the 2009 Act intended it should remain. One can imagine my surprise when I heard at the weekend, last night and today, an Opposition spokesperson refer to the legislation as a plan for wholesale repossessions. Let us bear in mind that this is a Bill which merely affirms a measure the Opposition thought was secured in its own legislation. This would be funny were it not for the fact that so many people are in mortgage difficulties and the last thing they want is dishonest hyperbole and political and populous cant.
In terms of an about-turn, it is matched only by the U-turn on property tax, a tax which the Opposition readily conceded when in Government in return for a bailout. Similarly, it criticised the personal insolvency arrangements but in the same breath criticised the delay in introducing and getting them implemented. It is time for honesty, consistency and realism. I have never come into House to criticise the Opposition but on this occasion I do because people are hurting on all fronts. The recovery from the catastrophe that befell the country and the people is inevitably slow and painful. For some the recovery will come too late and for some it will not come at all. The very least we owe the public is absolute honesty. There is no future for them or for politics in pretending debts do not matter, whether personal, bank or national debts. I understand and feel exactly the same fury at the banks as everyone else for their part in bringing down the country. Like everyone else, I would like to see bankers who sailed off into the sunset penalised bitterly. I would like to see managers who are part of the problem and who are still in place reflect in their salaries some element of apology and regret for their part in what happened to this country. Criticising bankers is one thing but undermining the banking system and its potential for recovery is an another thing. The Opposition, Fianna Fáil, Sinn Féin and everybody knows that the only basis for banking and any lending institution to continue to lend is that there would be a threat of repossession. One cannot break the link between lending risk and security. If so, there will be no basis on which any bank would lend. Why would they? How should they?
It may be an unpalatable truth and I realise people do not want to hear it but the personal insolvency legislation gives people in difficult situations the possibility of gradually sorting out their problems.
It is clear repossession is a last resort option but it must remain an option. There will be no banking lending at all if it is not an option which is not in anybody's interest. Pretending to oppose that option is dishonest and damaging to the economy. It is damaging because continuing to portray the banks as the big bad wolf is to deny the fact we are the owners of those banks. As their creditors it is in our collective interest as a people that banks should recover and begin to prosper again and ultimately be in a position to pay to the Irish people the money they owe us, which we lent to them. Pretending debt can never be incurred without any risk to the security borrowers freely offered is not fair to the public at large nor is it fair to those who find themselves unable to meet the full terms of their mortgage. It falsely and dishonestly raises their expectations and we owe them better than that.
We all hope the personal insolvency arrangements will solve the majority of mortgage holders' problems but for some there may be no prospect of extricating themselves without the loss of their home. The least we owe those people is honesty.
As politicians, all of us, of whatever hue, deal with people every day who have been overwhelmed by their debts. We deal with people whose debts are such a heavy burden that they and their families will be dealing with it for a number of years to come. For some members of Fianna Fáil to make speeches in this House, therefore, as they have done in recent days, is not just cynical but is outright hypocrisy and an insult to the people and all they have been going through in recent years. If Fianna Fáil had got its legislation right in 2009, all of these individuals would have had no protection in the course of the past four years, especially from sub-prime lenders. We have no control over those particular lenders so they would have been free to throw individuals out of their homes in the past four years without there being any of the protections the insolvency legislation now gives to these people.
This Government did not introduce this legislation until we had first brought in the insolvency legislation in order to help to protect those very individuals. We have some control over what we can do with the banks but we have no control over the sub-prime lenders and it would have been very much those types of lenders who would have moved in to dispossess people of their homes. It is a mockery of the individuals in question and what they are currently going through, therefore, when the leader of Fianna Fáil, a former Minister who would be well aware of the background to this type of legislation, stands up at his own Ard-Fheis and proclaims we are doing something wrong. If he had got it right - and that party got many things wrong - those individuals would have been thrown out of their homes in hundreds, if not thousands, in recent years arising from the fault in the current legislation.
The insolvency legislation we are putting through tries to strike a balance for individuals so that, as often as possible, they can stay in their own homes and, for the banks, to force them to a degree to sit up and take notice. Strangely, one problem for the banks is that they do not have expertise to deal with mortgage arrears or how to deal with people who have run into difficulties. For so long the banks have been geared to throwing out hundreds, thousands and millions of euro to people that they have actually forgotten how to lend prudently and are now learning banking again. It has been made quite clear by the Minister and by everybody in government, fully supported by all backbenchers, that we can change insolvency legislation in this House if there is a sense the banks are not being reasonable with the people they are dealing with.
This mortgage arrears crisis is massive in terms of personal debt and loans to individuals, whether for buy-to-let, residential or second home mortgages. The sum involved is probably in the realm of €15 billion. The banks have been recapitalised for some - but not all - of this, so there is a need for us to be realistic as to what we can achieve. Both the insolvency legislation and this Bill try to reach that compromise.
I was in opposition long enough myself so I know what passes as the usual Opposition cant we rattle off whenever possible because we know we will never have to worry about it. It sounds good, gives a nice sound and makes people feel happy in themselves. However, one thing I know is that when one is in government one has to do things responsibly. Thank God we put the insolvency legislation through first. We have given people a chance and now it is important for those of us on this side of the House to watch what is happening and what the banks are doing. If at any point the Opposition parties would care to mature and grow up they should act like politicians who are well-paid, do their job properly and not try to mislead the people. People are fearful and are very concerned about what is going on. We still have very high rates of unemployment and very many people are concerned about their debts. However, we will ensure we are on their side as much as possible and will do the very best for them.
I ask members of the Opposition, as they have more time on their hands than members of Government, that if they come up with policy alternatives at least to try to make sure these are sensible propositions that the people will respect, rather than add to the fear people are experiencing at this time. It is a very difficult time: one that really hurts for many individuals. Some people know their debts have so much overwhelmed them they will lose their homes. In addition, they are concerned about being burdened by debts that are very much the responsibility of the lenders, how they will deal with these and write them off. Some people know that if the banks were a little more understanding of their plight they could work their way through this crisis but this will not be done in months; it will be done in years. Then there is the 85% of people with mortgages who are making their repayments, even though everybody who took out a mortgage since 2001 is in negative equity. That is difficult for many people, knowing they find themselves in this situation because the crisis was so huge. There was a 20% collapse in our economy in the course of a couple of years. Such a collapse does not recover easily and our property section will not recover easily. For that reason many people will carry their negative equity debt probably until the date they make their last mortgage repayment. That is difficult for people to stomach and there should be a more honest and fair appraisal of their situation rather than have it exploited for political gain in the short term.
Deputies Joan Collins and Tom Fleming have 20 minutes. I assume that is ten minutes each.
My colleague will be here shortly.
This debate is important and many points have been made, from one side of the House to the other. There is no doubt that the rate of repossessions has been very low, partly because of the 2009 judgment but also because of negative equity and the banks not wishing to move to repossess because of the effect it might have on their loan books. The banks have already partly been bailed out to the tune of some €64 billion for the loss of equity in homes. The idea that a low level of repossession, or evictions as it would properly be, should be seen as a good thing and preferable for society than to have people lose their homes because they cannot afford their mortgages seems to be a problem for the troika. It has demanded legislation by the end of March in order to close the judgment of 2009.
There have been Ministers and Deputies assuring us that repossessions, evictions of families from their homes, will only be a last resort but there is absolutely no guarantee this will be the case. After this legislation is passed it is inevitable that there will be an increase in evictions, not only in the buy to let area but also including family homes. Some €62 billion of the €142 billion outstanding in mortgages lies with foreign-based banks - Ulster Bank, the Bank of Scotland, RBS, ACC and various sub-prime lenders, all of which have withdrawn from the Irish mortgage market. They are not lending into the market and are more concerned to get what they can and exit. That is it - they will get what they can. I know from my experience in dealing with people in mortgage crisis that these are the most aggressive lenders in terms of resorting to the courts.
If the Government was serious about protecting the family home it would accept that what is required is specific legislation to restructure mortgages for people who are in arrears and struggling with their mortgage for the family home. I have raised this issue a number of times.
I have also tried to have it included in the insolvency legislation. It is well known that specific legislation is needed to deal with mortgage restructuring.
The Bill I prepared is based on the Norwegian model and aims to protect people in their family homes. It is a tried and tested approach that worked effectively in dealing with a mortgage crisis in Norway. As these loans were solely on the family homes, the legislation provided for a right to a suitable family home and only permitted the property to be sold on the basis of sufficient after-loan clearance to purchase a suitable home in the same locality. Payments were based on maintaining a reasonable standard of living, which would be determined by an independent personal insolvency practitioner if voluntary agreement could not be reached between creditor and borrower. Any negative equity was treated as unsecured debt and secured debts were based on the market value of the security of the home plus 10%. The legislation also required that all financial matters be fully and truthfully disclosed.
Members of the Labour Party suggested similar ideas before they were elected to Government only to ignore them afterwards. The Minister for Social Protection, Deputy Burton, argued that the price of a home should be set at market value plus 10%. I cannot understand why these provisions are not being included in the insolvency legislation. The only explanation is that the Government fears that the banks will not accept legislation of this nature.
These measures will mean nothing if people who are struggling to pay the interest on their mortgages are required to pay up to €5,000 to a personal insolvency practitioner. People are right to believe this will be another gravy train for the legal profession. The Government should have established a similar process to that of MABS so that a public entity could help with cases of personal insolvency. Repossessions are inevitable if people cannot afford the services of a personal insolvency practitioner. Even if the Government allows the legal eagles to make large amounts of money, it should also allow people access to a publicly funded personal insolvency agency. MABS should be resourced sufficiently to provide this service because its staff has gained valuable experience in assisting people with debts. It could use its expertise across the board rather than leave it to individual legal professionals to work on a case-by-case basis. This may be why the Government is not allowing MABS to take on this role. It would be useful if the experience gained in specific cases can be used to assist others to find a resolution. As the legislation stands, however, the banks will be able to make the final decision on whether to accept the resolution proposed by a personal insolvency practitioner.
A previous speaker stated that our personal and national debts are painful for people. It is very painful for some people but I recently spoke to an individual who was invited to a dinner at which two bottles of wine worth €95 each were served. Somebody in this country can still afford to splash out €95 on a bottle of wine. That is a social welfare payment. There is plenty of money in this country but the pain has been put on the shoulders of ordinary people who are struggling to pay their mortgages and stay in their homes. They want to be debt free in order to be able to spend money again on our high streets. Unless we introduce specific legislation on the family home and lifting the burden, the issue of repossession will not go away. If attempts are made to repossess ordinary family homes, people like me will defend the occupants. It will become a big issue in this country.
If this Bill is enacted it will open the floodgates to wholesale evictions and repossessions by the ruthless and unscrupulous banks which lit the fire in the first place with 100% loans and ill-advised mortgage arrangements. Customers who walked in the door of these institutions were practically blindfolded and ended up walking out with loans of up to 130% of the value of the house. Money was thrown around like confetti.
In many cases loss of employment is the reason for distressed mortgages. A study by the Central Bank indicates that 32% of residential mortgages in serious arrears involved mortgage co-payees who were unemployed. Unemployment does explain the remaining 68% of mortgages in arrears. Mortgage payments have been subject to unsustainable increases relative to after tax incomes. Last week AIB increased its rates for the majority of its mortgage customers by 0.4%. This represents a substantial increase in monthly repayments for most mortgage holders.
The consequences of this uncontrolled and unethical system have now come home to roost for thousands of unfortunate victims of an inflated market and soft or non-existent regulations. The former regulator, Mr. Neary, was brushed aside or kept his head in the sand while the fires burned around him. The banks have been rescued with taxpayers' money but they are still in control even though they are State companies at this stage. They are acting in an independent manner and do not appear to feel responsible to anybody, least of all the Government, which is acting in a defeatist manner. Citizens remain at the mercy of these institutions. The German Chancellor, Ms Angela Merkel, and the troika are calling the shots.
We should provide a mechanism in the legislation to afford judges additional powers of direction to deny banks the right to repossession when they are treating their misguided customers in a most unfair manner. The banks do not have any appetite for the personal insolvency legislation, under which a personal insolvency practitioner is required to find ways and means to advise clients on how to avoid being put out of their homes.
I concur with Deputy Joan Collins that the money advice and budgeting service already provides a service on the ground that could have been upgraded. MABS has outstanding staff with great expertise and abilities. If the organisation had been provided with additional staff, it could have provided a much better intermediary service at a much lower cost to customers than that envisaged under the personal insolvency legislation. Unfortunately, the matter is done and dusted. It may still be possible, however, to find a means of integrating the service provided by MABS into this problematic area.
The Bill is premature and should be parked for at least six months to allow the long awaited Personal Insolvency Act to be tried and tested. Those holding the most distressed mortgages will experience dire straits as a result of this Bill, which does not provide an opportunity to explore the limited protections afforded by the Personal Insolvency Act. If robust, practical and pragmatic solutions are found, repossessions will be kept to a minimum.
According to statistics from the Central Bank, more than 20,000 mortgages have been in arrears for more than two years. In some cases, a debt write-down will be required to make these mortgages sustainable. Of the approximately 760,000 mortgages held for private residential properties, more than 140,000 are in arrears. The Bill should be delayed until later in the year to give the most vulnerable mortgage holders time to negotiate and avail of solutions such as interest only or reduced repayments. Other viable options include split mortgages, which involve giving home owners an option to freeze a portion of their mortgage until their finances improve, and the making of a bullet payment at the end of the loan term or when other assets can be converted into cash. The downside of the current arrangements is that split mortgages account for only 12 of the approximately 85,000 mortgages that have been reconfigured thus far. This minute number demonstrates that the split mortgage option has not been adequately pursued. The mortgage arrears resolution process, MARP, is another option available for those who hold distressed mortgages.
The argument that investment properties rather than family homes are the primary focus of the Bill should be taken with a grain of salt. Homes will be targeted in a vigorous and proactive manner. In view of the appalling vista of mortgage indebtedness, every avenue must be explored. The Central Bank must proactively promote the mortgage arrears resolution process. It has indicated that it has established a framework of mortgage arrears resolution performance targets for the six main Irish mortgage credit institutions. Under these targets, the banks in question should have proposed sustainable mortgage solutions to 20% of distressed borrowers by the end of June 2013, 30% of distressed borrowers by September 2013 and 50% of distressed borrowers by the end of 2013. The aim is that the majority of distressed borrowers will have been proposed a solution by the end of 2014. In the circumstances, the Central Bank should ensure that the priority of any proposed solutions should be to enable people to remain in their family home, whether by rolling out the mortgage-to-rent scheme or developing options for the mortgage-to-lease scheme. More comprehensive advice and guidance must be made available on new arrangements for people in arrears.
Immediate action is needed to provide an alternative to the proposals in the Bill as the banks will not show any sympathy to those who are in trouble - their motivation, as they have demonstrated repeatedly, is profit - and the courts will enforce the law. We must tread carefully with this Bill. It should be redesigned to provide some solace to a worried population. I ask the House to assess, evaluate and amend it, rather than rushing to conclusions. We should give the personal insolvency arrangements a chance before proceeding with this legislation. For this reason, I suggest putting it to bed for at least six months.
Home repossessions are not in anyone's interests. The Bill before us makes easier the repossession of homes by banks in the case of mortgage arrears. Instead of protecting people from being thrown onto the streets, the Government has worked diligently and efficiently to produce legislation that will increase the stress and fear already experienced by families struggling to keep their heads above water. The Bill will create more worry for people who lie awake at night fearing the day the debts they accrued to provide a roof over the heads of their families catch up with them.
I propose to address an issue that many Deputies do not consider when speaking of repossessions. I have raised this issue repeatedly in the House but have received little in the way of a concrete response on what is being done to tackle the problem. I fear this Bill will open the door to a much greater threat. The group I speak of are tenants in homes owned by landlords who are in arrears on their mortgages. Prices in the rental market have increased significantly in recent years, with demand causing Dublin rents to increase by 6% in the past two years. The number of available homes has decreased fourfold since 2009 and a large number of people are living in rented properties. The precarious nature of the ownership of many of these homes is clear from the most basic figures on mortgage arrears. Some 29% of the 150,000 buy-to-let mortgages are in arrears and of these, 17% have been in arrears for 90 days or more. This means a staggering 26,770 rental properties are at serious risk of default. What will happen to the tenants of these properties? Thankfully, the individuals and families in question do not face the problem of crippling debt experienced by many mortgage holders. However, they face a serious problem that must be addressed.
The level of housing need has never been greater or more severe in the history of the State. This Bill, which, if the Government was being honest, would be named the "Home Repossession Bill", is going to put more families at risk of being in severe need of housing. In recent weeks and months I have dealt with many families whose rented homes are under threat. Despite the fact that they are paying rent - in many instances the amount they pay is greater than what they would be obliged to furnish in mortgage repayments - they now face eviction. Landlords are receiving people's rent but are not paying their own mortgages or else they are only paying them in part. The banks do not want these homes to remain in their ownership. They do not want to be landlords or to honour the agreements which tenants signed with their own landlords and which they did nothing to break. Banks want to make a quick buck by selling these properties and moving on. It is likely that this is going to happen on a large scale. Where will we find ourselves at that point? If nearly 50,000 buy-to-let mortgages are in arrears, then these problems will only become worse and their impact cannot be underestimated. To underestimate them would be to play with the lives of many people. The Government has already done too much of that.
One group of tenants is in particular danger - those who are in receipt of rent supplement or on the rent allowance scheme. The latter scheme, which involves the use of private housing to deal with the State's failure and unwillingness to provide a sufficient number of publicly-owned homes, has been shown to be unreliable and unsuitable in the context of meeting the huge housing need that exists throughout the State. Families who are in receipt of rent supplement and on the rent allowance scheme are, by definition, those in the low-income bracket. Those in receipt of rent supplement are prevented from working. This perpetuated the existence of a poverty trap even in boom times. People who are in receipt of rent supplement are in no position to find new accommodation, particularly with the advent of spiralling rents and the imposition of deposits, not to mention the terrible condition of much of the housing on offer at the lower end of the scale. Recent Dublin City Council inspections revealed that 90% of the flats visited in the city fall below even the most basic of standards.
The Bill before the House and the cuts which have already been introduced will force many families into housing which is not suitable for human habitation. That is the result of Fine Gael and Labour policy. People on the rent allowance scheme were, by virtue of the contracts they signed, guaranteed that they would not be obliged to go without homes. They lived up to their side of the bargain but the State has been found wanting in respect of its responsibilities. Local authorities do not want people to be without homes but what can they do? They are not allowed to build any houses and cuts of over €1 billion have been made to the housing budget since 2008. We must address these problems and we cannot allow the potential catastrophe to which they might give rise to become a reality for the thousands of people who are at risk. I call on the Minister for the Environment, Community and Local Government and the Administration of which he is a member to take the initiative and negotiate a binding code of conduct with lending institutions in order to ensure that families will not be thrown out on the street as a result of repossessions. I also call on the Minister to work with these families which, in many instances, the State has already failed.
The crisis in housing is becoming worse. At my constituency office each day I meet people who are in serious trouble and who cannot even obtain rent supplement. Landlords are saying that they do not want to be paid by means of that supplement. That matter must be addressed. Landlords cannot be allowed to refuse money. Why are they refusing to accept the rent supplement? What is happening is outrageous. We need to address this issue.
I welcome the opportunity to contribute to the debate on this Bill. Housing is one of the core issues relating to an individual's well-being and his or her life situation. Even more importantly, it is a fundamental expression and building block of society. One could go further and say that housing has much to tell us about the values, identity and integrity of a given society. If we follow this logic and consider Ireland, and, by extension, Irish society, what we see is a society that is in free fall. This is a country which is in economic ruin and in which large numbers of people are struggling to pay their mortgages and keep a roof over their heads and who live in constant fear of eviction. Many of them are faced with making a decision with regard to whether it would be better to hand over the keys to their homes to the banks.
Living a life where every day is a struggle and where one's nights are full of worry and an all-encompassing dread of what the future may hold severely damages the human psyche and causes families to self-destruct. In the Ireland of today, thousands of people and families live like this. Unfortunately, what I have described is life in the real world, a world in which people live with the mistakes of the past on a daily basis. They do not have the luxury of talking nonsense about some great future we are all going to enjoy. Every day they struggle to find the money to pay for bread, potatoes or a pair of shoes for one of their children. They are living in the real world. This is a world of debts, arrears, loans and scrimping and scraping. It is a world devoid of hope, with no light at the end of the tunnel.
If one listened to Deputy Martin's presidential address to his party's Ard-Fheis on Saturday evening last, one would think he only joined Fianna Fáil in 2011. In February, the Governor of the Central Bank, Professor Patrick Honohan, said that household financial distress is at unprecedented levels and that this can be seen in the extraordinary rates of arrears relating to owner-occupier mortgages. The Central Bank's figures inform us that more than one in ten mortgage holders are now in arrears of three months or more and that some 27,000 - or almost 18% - of buy-to-let mortgages are in arrears. The Bill does nothing for the people affected in this regard other than increasing their fears and by enshrining in law the fact they can be evicted from their homes on the say so of some bank which probably engaged in highly unquestionable actions in the past. This is not right. It is also neither fair nor just and it makes no political sense.
Sinn Féin is opposed to the Bill because it does nothing to help people whose mortgages are in distress. Indeed, the opposite is the case. The Bill, like all the other policy initiatives of the Fine Gael-Labour Government, comes down on the side of the rich, the privileged and those with big money. It favours the banks and financial institutions over the ordinary people of Ireland. It also favours money and finance capital over the futures and lives of families, children, mothers and fathers and single people. The Land and Conveyancing Law Reform Bill 2013 does nothing to help those who are struggling and whose mortgages are in arrears. It may ingratiate Messrs. Kenny, Gilmore and Noonan to the troika but this is not what good politics or, for that matter, good governance are all about. In a republic, good governance puts the people first. It is the people, Mary and Joe Bloggs, who are centre stage, not bankers, international bureaucrats or financial capitalists. This Bill is contrary to the people's interests. Any legislation which does not put the people first and protect their interests will be opposed by Sinn Féin. Sinn Féin is on the side of the people and will continue to fight for their interests in this House.
In the late 1800s Michael Davitt stoked the fires of dissent and agitation among the people of Ireland, especially those living on the western seaboard. He launched a campaign against landlords and gombeen men in order to tackle the injustices that was resulting in the eviction of families throughout the country from their homes. Michael Davitt was a revolutionary, an agitator, a social campaigner and a national hero. Given that it is May Day, it is good to remember him. I wonder what he would make of this particularly nefarious legislation.
Ministers like to quote figures but I am not at all sure the Government fully understands and appreciates the terrible position in which many families find themselves at present. One in four households is experiencing mortgage distress. How many such households were given loans well in excess of what they could sustain? How many received loans well in excess of those which would have been approved under prudent and sensible bank guidelines? To what extent did reckless lending lead to the price of houses shooting up to unjustifiable and unsustainable levels? Have the banks paid any price for their part in all of this? When one considers the salaries and pension packages of their senior decision makers, one comes to the conclusion that they are being well rewarded for the mistakes they made.
During the Celtic tiger years, the then Government and certain sections of the mainstream media propagated the myth that the property bubble was a sustainable economic mechanism. The then Taoiseach and leader of Fianna Fáil, Bertie Ahern, stated that anyone who talked down the Irish economy should kill himself or herself. We were informed that the patriotic thing to do was invest in the inflated property market.
We were warned that if we did not get a foot on the property ladder, we would end up living on the side of the road. Instead of investing in the real economy and creating sustainable jobs, the then Government put all of its eggs in the fragile basket of the property bubble. Now, the people of Ireland must pay the price for this reckless gambling.
An increasing number of people from all strands of society are falling into mortgage arrears. A report published two weeks ago by the money advice and budgeting service, MABS, found that clients in mortgage difficulty were primarily households with children, located in urban areas and headed by people between the ages of 45 and 65 years.
The Personal Insolvency Act 2013 was rushed through the House with inadequate time for a thorough examination. This is not the time to make it easier for banks to evict people from their homes, which is what this Act does. It grants greater power to banks and takes power from ordinary citizens. That is not what a functioning democracy should do. This is not democracy, but oligarchy - government by the few on behalf of the privileged few.
Section 2 of the Act allows the court, either by its own motion or on application by a relevant person, to adjourn repossession proceedings for a maximum period of two months to allow for the consideration of the making of a proposal for a personal insolvency arrangement, PIA. Two months is insufficient time to make arrangements, deal with banks or find alternative accommodation. Greater leniency is the minimum that the Government can provide to families that are about to be evicted.
As elected Members of the House, we all represent our constituents. Collectively, we represent all of the people of Ireland. We should not be Members to represent banks or banking interests. We must make up our minds. Do we represent those who elected us or the privileged few? Do we want democracy or oligarchy?
Deputy Wallace is next. I understand that he is sharing time with Deputy Clare Daly. Is that agreed? Agreed.
The Bill is designed to make it easier for banks to repossess properties and seems to address a discrepancy in the July 2009 Act. It was amusing to hear Deputy Niall Collins of Fianna Fáil state yesterday that the prospect of a collapsing housing market and a mortgage arrears crisis on the scale that we are now witnessing was never considered by any party in this House. My building crisis began in September 2007. It is scary if Fianna Fáil did not know what was happening in July 2009.
Much of our discussion on the banks relates to questions of what is sustainable. It is difficult to decide what is sustainable for one person but not another. A bank may make an offer that it claims is sustainable but that the borrower views as impossible. Sadly, there is no neutral referee. Although there is an appeals board, it is staffed by bank employees who we cannot be certain will be impartial.
The Government has claimed that repossessions will be a last resort. It is difficult to know what "last resort" means. What will happen to legacy debts? Will they hang over people's heads forever, causing stress and fear? Will people become homeless because banks repossessed their properties? If the banks repossess properties, how much they receive for them will be interesting. In Iceland, a decision was taken to write down mortgages to the amounts that banks or other financial firms could expect in the best of circumstances to gain from taking over those assets. Realising their monetary value was viewed as sensible. If someone paid €400,000 for an apartment that is now worth €200,000 and the bank sells it in a fire sale, it will probably go for €150,000 or €160,000, meaning that the bank will lose €240,000. Why not find out a property's real value, as happened in Norway in the early 1990s? If a property's value decreased from €400,000 to €200,000, 10% was added and people were given new mortgages of €220,000. This made sense for everyone and Norway's economy recovered more quickly. As long as the Irish banks refuse to engage on a sustainable basis with their mortgage debtors, many people will not recover.
The Government would correctly claim that its debt is unsustainable, leading to it asking Europe for write-downs. We took on debts that we should not have. We also sought to extend our repayment periods so that we might deal with our debt more easily. If this approach is good enough for the Government when dealing with Europe, perhaps the same relationships should be developed between banks and citizens. The Irish citizen needs a break. It makes no sense for banks not to deal with citizens in a rational way. I do not know how repossessions in any form will solve problems, even those of the banks.
Regardless of whether we like it, there are different strokes for different folk. Independent News and Media, INM, received a bank bailout recently for which the taxpayer will pay. That company is still trading, and presumably well. It is keen to keep going. This case causes concern. Many people in Ireland would have loved to get support from the banks. Many companies would have liked the banks to be patient, to give them time to deal with their problems, to write down their debts to sustainable levels and to give them a chance to continue and keep their jobs. In the past two years, many companies have received letters from banks telling them that they had 24 hours to repay the banks what they owed, after which the banks would get court judgments against them. Obviously, the law is not the same for everyone.
On the bailout of INM, Mr. Colm Keena wrote in The Irish Times:
No-one is arguing that it is better that companies with unsustainable debts be allowed collapse rather than have their debts reduced to manageable levels. But giving write-downs to companies that are wholly or in part owned by non-resident billionaires who appear to be flush with cash, raises the kind of issues referred to in the OECD report. This is especially so when so many people on moderate incomes are being levied with extra taxes, while also struggling with debts which the banks, and the Government, say should not be written off if the debtor can pay, lest it create a moral hazard.
Moral hazard is an interesting topic and is used as an excuse by banks. When I discussed the idea with a bank with which I have a few issues, I was told that moral hazard was a concern. Where was the moral hazard excuse when the banks, with their reckless business practices and overpaid managements, were bailed out by taxpayers who are still paying for it day and night? It is a bit rich of any bank to mention the term "moral hazard".
If banks engage in repossessions, they will sell those properties for less than it would cost to build them today, even if the site was acquired for free. How logical is it to put people out of their home and to sell it for less than it is worth? We need a common-sense approach.
If we are not going to deal with the mortgage debt crisis in a sustainable way, we definitely cannot expect the domestic economy to recover in the near future. Neither can we expect to see any serious inroads in the unemployment figures. I do not think we will see a huge change in the emigration figures either. We are facing significant levels of rising inequality in this country and around the world. Repossessions and a failure to deal with mortgage debt in a sustainable way, rather than just kicking the can down the road, will increase inequality in society and that will have major repercussions for this country.
I wish to refer to a few issues raised by Noeline Blackwell to which many speakers have referred. She has called for more balance between the power of the bank and the borrower. We would all admit that it is a little unfair. The period of two months allowed for a person to work out his or her problems with a financial institution is a joke. Not a lot happens with financial institutions in two months. One would need much more time than that. Six months would be far more realistic. A period of two months does not allow sufficient time for real negotiations. Things do not happen like that. The financial institutions are in a different world.
The Companies Bill was discussed last week in the House. I noted that one proposed change would allow the Circuit Court to deal with problems that were previously in the jurisdiction of the High Court. That is a good idea. The same approach should be taken to the reform we are discussing. As Ms Blackwell pointed out, going to the High Court is a considerable extra expense for people, and having cases dealt with by the Circuit Court would make a lot more sense and ensure costs were more manageable. It goes without saying that Ms Blackwell’s point about the lack of legal and financial advice for distressed borrowers is a big factor. The financial institutions will not be short of legal advice or financial advice, but we can easily imagine the distressed borrower being short of the same. Perhaps we should try to balance matters in that regard as well.
It is somewhat ironic that there are so many problems in the State and so many issues on which the Government could legislate to fix them, yet it has frantically decided to address one of the areas that is probably not that bad in an international context due to the very low level of repossessions in this country. It is doing so at the behest of the troika.
It is also ironic that the action is taking place simultaneously with the demands from the troika on the introduction of a home tax, a tax on what is in many instances a liability for many people who are struggling, and for the hundreds of thousands of citizens who are in mortgage arrears and great personal and emotional distress, not to mind economic hardship. One would have to ask where the Government is going with the Bill. Talk about great timing. The Government is introducing the Bill at the same time as we had reports last night that what we can face in the future is continuing austerity, the prospect of further tax hikes and public sector cuts of €3 billion next year, followed by another €2 billion the following year. However, at the same time, the stability programme update revealed that in fact the Government will have a primary surplus of approximately €1 billion in 2014. In other words, we are collecting approximately €1 billion more in tax revenue than we are spending on public services. The reason we cannot enjoy the surplus and use it to develop public services is because of the enormous national debt, one that was in the main undertaken to bail out banks and bondholders. That is the nub of the issue, yet those very same people whose actions are crucifying ordinary workers and citizens in terms of their pay packets are the very ones who are also putting the squeeze on people in their own homes.
It is a little sad the speed at which the Government can move to address what is being called in a derogatory way a loophole but which I would call a safeguard and a good thing. The Government is moving faster to make it easy to repossess properties through the courts. The points have been well articulated by other Deputies about why that needs to be absolutely balanced in terms of protecting lenders and why a number of amendments will have to be made on various Stages of the Bill. I will not repeat the points made. I pose the question as to how it could be a good thing that people’s homes are to be repossessed. One could ask how that will benefit anybody, not least the overall economy. While the Government can say that the family home is being protected and will only be seized as a last resort, the reality is that we all know that it is not the experience currently. If the law is changed further, the process will accelerate further.
This afternoon, my colleague, Deputy Joan Collins, had a telephone call to her office from a very distressed woman who is having terrible dealings with Bank of Ireland. Her mortgage is unsustainable as a result of a separation. Her husband has left the country and stopped paying the mortgage long ago. She lost her job two or three years ago and the bank is putting her under enormous pressure to sell the property. The reason the bank is pursuing her particularly aggressively is that the property is not in negative equity and it knows it can get its money back. If that happens, the woman in question, who is without a job and without a roof over her head in the latter years of her life, would be thrown at the mercy of the local authority social housing list or society in general at a time when an arrangement whereby she could stay in her family home is being ignored by the same bank.
Another young couple who have two children with severe disabilities were advised to get a bungalow which could not be supplied by the local authorities and were encouraged to buy one. They spent a lot of money adapting the premises to meet their children’s needs. The husband lost his job and they are being squeezed and threatened by the sub-prime lenders with repossession of their home. They made a reasonable offer that would result in a more sustainable mortgage and the lender getting more money than it would if the house was sold, but their wishes were ignored. One could ask where they will end up – back on the social housing list that could not accommodate them in the first place. It makes no sense whatsoever.
As Deputy Wallace said, the only solution is that the banks would engage in some form of a write-down of mortgages where the value of the properties is written down to their more reasonable current value. Sub-prime lenders in particular are not operating. They have shut down and they just want to get out of the Irish market and realise as much cash as they can before they go. Making appeals to them to be reasonable, fair and nice to people who are struggling will not work. The only measure that will protect the family home is legislation to enforce it. It is somewhat sad that the people whose homes are not in negative equity but who have lost their jobs are the ones who are most at the mercy of the banks. All of the points that have been made about the lack of protection for borrowers have been ignored. We have seen very aggressive actions taken by the banks in the courts, and that will only get worse. Not only that, we have also seen many scams where some lenders are engaging in fire sales of properties for which people have handed back the keys and left the country. There are many examples of people making a higher offer for a property and the lender not accepting it, presumably because someone they know or a friend of theirs is in the running to buy the property at a knock-down price from which they can benefit and make a killing later.
We have to put this firmly in the context of the overall economic situation. This measure and home repossessions will do nothing to protect the economy. If anything, it will drive down property prices and lead to an increase in suicide. I do not say that lightly but based very much on the experience in Spain. In that country, the credit crunch and rising unemployment has resulted in a situation where home repossessions are at a record level. Almost 30,000 repossession procedures were initiated in the first quarter of this year alone in Spain, which is an increase of 126% on the figure in 2008 and 59% on the 2009 figure. In actual fact, the numbers are probably even higher because a number of repossession procedures often involve more than one property. The result is that the banks have in excess of €20 billion worth of repossessed properties on their books, which in and of itself is causing a problem in the commercial courts and so forth. Nobody is benefiting from that situation. Overall, almost 400,000 evictions have taken place and studies show that this situation is demonstrably linked to the frightening rise in suicide in Spain. It is a bit ironic that we have heard so much here about suicide vis-à-vis pregnant women who may need an abortion, with everybody in a big flap about that, but nobody is taking into account the very real pressure on people because of the economic situation and the housing difficulties they face.
I will not repeat the points made by others but we have heard organisations like New Beginning, FLAC and others explaining how they meet thousands of people who are literally at their wits' end. People are at an incredibly low ebb and there are hundreds of new cases every week of people struggling, trying to engage with the banks to get fairer settlements but being ignored. This Bill is designed to make that situation not better for them, but worse. It will add to the pressure they are under. The lives and well-being of our citizens are being sacrificed on the altar of the banks. The banks have been bailed out and they, in turn, are putting the squeeze on us.
It was quite correct of Deputy Wallace to highlight the bailout granted to Independent News and Media, which is one of the organs which champions Government policies and stands idly by, allowing this situation to go unchallenged. It does not challenge the fact that the taxpayers and ordinary citizens are bailing out developers through NAMA. Billions of euro in taxpayers' money has been spent on developers, many of whom continue to trade, while the ordinary taxpayer picks up the bill. Where is the objection to this from Independent News and Media? There is none because it has been bailed out too. It is the very same organisation that warns that we cannot have a similar write-down for hard-pressed home owners because that will taint everything and will represent moral hazard, with negative repercussions for everybody. That is not the case, however. Keeping people in their homes, with sustainable and real solutions, is of benefit to the individuals concerned and to society, but it will not be facilitated by this Bill.
I wish to share time with Deputy Luke 'Ming' Flanagan, with the agreement of the House.
There is huge mortgage distress in this country, with almost 12% of mortgages in arrears of more than 90 days. There is also an enormous level of negative equity, with property values down by approximately 51% since the boom. We also have extremely high levels of unemployment and emigration. There are many people who are simply and honestly unable to make mortgage repayments and who are in serious financial difficulties. What those people need is a mortgage bailout. However, this Bill proposes to ensure it is easier for the banks, which have been bailed out to the tune of billions by the citizens of this State, to repossess homes and evict families. It is difficult to believe such a Bill is before the House. We treat the banks and bondholders in one way, supporting them and bailing them out, while we treat honest-to- goodness householders and mortgage holders in a completely different way, ensuring they are put under continued pressure and at risk of losing their homes.
We must support distressed mortgage holders. Mortgage rates must be frozen at September 2008 levels. The capital debt should be reduced to the level of current house prices and, far from ensuring the banks can more easily repossess homes and evict people, we should provide legal protection for householders in this situation. We must remind ourselves of how all of this came about. During the boom, the kept economists and commentators of the finance houses and banks and the media told people to get their foot on the property ladder before house prices increased further. They said there was no chance of a property crash, that there would be a soft landing and that the banks were well capitalised. RTE broadcast such comments almost daily. Every national newspaper published such forecasts and advice, along with enormous property supplements. They told people not to miss the opportunity to get on the property ladder. Now, tens of thousands of people are in negative equity and are finding it impossible to make their mortgage repayments. Some have been threatened with eviction and more will be so threatened.
The Central Bank is funded by taxpayers, including mortgage holders. It is the duty of the Central Bank to ensure prudence in banking. There were top business people, top trade union officials and senior civil servants on the board of the Central Bank during the so-called boom, who reported to the Minister for Finance. They allowed banks to borrow €90 billion abroad between 2003 and 2007. They also 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 over the moon. I include here professors of economics from the ESRI, an institute that is also funded by taxpayers and charged with giving expert advice to the Government. Nobody shouted stop. The Government, the print and broadcast media, auctioneers, valuers and many others advised people, young couples in particular, to get their foot on the property ladder. They were all wrong and those same young couples are now in enormous difficulty.
I believe that mortgage interest rates should be frozen at 2008 levels, capital debts should be reduced to current property values and we should legally protect mortgage holders from eviction. We certainly should not be making it easier for the banks to evict people and repossess homes.
The current situation with regard to mortgage arrears is horrendous. At the end of 2012, 11.9% or 94,488 mortgages were in arrears of 90 days or more.
Significant numbers of people have found themselves in negative equity. I came across somebody recently who bought an apartment through the affordable housing scheme in Dublin. It cost €275,000 but was meant to be affordable as apartments in the same block were on the market for €375,000. The individual is now in the position where the apartments have lost at least 51% of their value, with the market price perhaps as low as €120,000. That is huge negative equity. The person in question has had two wage cuts and a pension levy applied, and he will have a home tax to contend with as well as astronomical management fees and a water tax next year. That is the kind of pressure being felt by ordinary people who took the advice of Government agencies in buying their homes. It is time for the Government to support such people rather than make it easier for banks to evict them.
One can contrast what has happened to those people with what has happened to bankers and bondholders. Bankers still have controlled salaries of up to €500,000, and there are also uncontrolled salaries. Last week the Minister for Finance would not even vote against a salary of €843,000 being approved for a particular banker. A part-time chairman in the same bank receives approximately €394,000, and every auctioneer, valuer, solicitor and developer-type professional in the country, who led mortgage holders into difficult positions, is being employed by NAMA and the NTMA and looked after by the State. It is time for the State to look after the citizens and householders.
The Bill should be withdrawn as it is wrong to take away what little support was afforded to mortgage holders by the 2009 Act. The Bill should be redrafted with the provision I have discussed withdrawn. Other areas have been highlighted to Members by various other organisations, like New Beginning and the Free Legal Advice Centres, and these should also be taken on board. They concern waiting times and using the Circuit Court in preference to the High Court for proceedings. There is also a case for providing legal and financial support and advice for mortgage holders who find themselves in severe difficulty.
There are times in here when one considers the names of Bills and wonders what they are about. I suggest the name of this Bill be changed to the "how to make it easier to chuck people out of their houses" Bill as it would explain it better. Perhaps it could be described as a Bill to facilitate the banks in shafting the public even more. That would explain what the Bill is about, so it would be a better title. As Deputy Healy noted, the Government should withdraw the Bill and spend its time putting together architecture whereby people can have debts written down. That is not something which is unknown in the Irish banking system. People need debt write-downs and they do not need to be further bullied by the banking system. Almost 100,000 households are in mortgage distress and if people are evicted, in most cases the State would have to step in. This legislation will not save the State any money, and although some might believe State banks will save some money down the line, overall the cost will increase.
At an Oireachtas committee meeting in later October last year, AIB chief executive, Mr. David Duffy, indicated that AIB would be in "very dangerous territory" if people who made "mad" decisions would get part of their debt "magically waived". The question needs to be asked as to who really are the mad people. Was he referring to the people who purchased a modest family home at the then market rate? The same people faced increased prices because banks like AIB and the now deceased Anglo Irish Bank shovelled money into the market. We know who he was not referring to. He was not referring to multi-billionaire media moguls, people who went "mad" by making the decision to buy newspapers around the globe at inflated prices, those who decided to buy many local titles based on prices reached from the assumption that the building boom would go on forever or media organisations who benefited from the bank and Government-engineered housing bubble by filling pages with advertisements for deluxe and exclusive apartments, otherwise known as shoeboxes. He was certainly not referring to any of those.
If Mr. Duffy had been referring to any of those, the bank would not have "magically" - to use his phrase - given Independent News and Media a write-down in the region of €35 million in the last week. That is the estimate only for that bank, of which we own 99.8%. Allowing for the biggest shareholding of 29.9% in the company, the Irish people have made a direct cash transfer from their pockets.
Who made this "mad" decision? It was not Mr. Duffy alone, as we have public interest directors after all, including a former Tánaiste, Mr. Dick Spring, the socialist, until he could not afford it. He is meant to represent the taxpayer on the board of AIB, so what was he at when this decision was made? In fairness to Mr. Spring, the socialist, he is recorded in his role as public interest director as having only worked 60 days in 2011. Maybe at the time this decision was made, he was on one of his 305 days of holiday per year, spending his €59,000 cheque from AIB, along with his €121,000 from a ministerial pension. Maybe he was spending his wonga while the bank was making its latest "mad" decision. I hope my language will be excused but I am quoting from the experts in the banking sector. What is the point in having a public interest director if the only people they are interested in protecting are multi-billionaire media moguls? Where is the voice of the AIB public interest directors when the bank is putting up interest rates on ordinary mortgage holders? It is yet again those who can least afford to pay who must pay the most.
I am sure all Deputies have had a stream of people coming to their offices with harrowing stories of how mortgage debt is crippling them both financially and, more worryingly, mentally. Deputy Clare Daly mentioned suicide, and the Government is obsessed with what the Green Party used to call "end-of-pipe" solutions to suicide. Perhaps we should concentrate on ensuring people do not end up at that precipice in the first place by making it a bit more bearable to live here and offering write-downs, as banks have done to the multi-billionaires. There was hope for these people when the Insolvency Service of Ireland was set up, but in examining its guidelines, we can see how the banks still have the whip hand, so it is easy to see how people's hopes are ebbing.
The service has published on its website guidelines on a reasonable standard of living and expenses. These are "essential to the process of moving towards long-term restructuring measures in that they enable the debt servicing capacity of a distressed debtor to be calculated in a fair and consistent manner so the sustainability of repayments can be established".
Did the Taoiseach's buddy, who got the €10 million euro write-down, have to go through such a process? Was he asked to get rid of all but one of his jets and all but one of his helicopters? Was he asked to get rid of his health insurance and to put his health at risk in a public health service that does not work? Were his living expenses examined under a microscope before we decided to write down the €10 million of his debt? Was he asked about the sustainability of his job, given the cost of child care? It is clear that Independent News and Media is not sustainable so perhaps he should go back to minding children instead of running a newspaper organisation that loses money that we have to pay for in the end. Was he asked what food he would eat and his clothing and personal care? Was he asked about household goods and communications? No, he would not be asked about communications. We gave him our communications for nothing. I imagine he would get a good deal if he went to some of his own companies. Did we ask him about his education? No, we had already educated him with taxpayers' money, tax he does not bloody well pay. Did we ask him about his household energy costs? No, we did not. Did we ask him about his insurance or about social inclusion and participation? No, we bloody well did not. We did not ask him about any of these things.
Instead, however, we go after the vulnerable.
The Deputy is not supposed to talk about a person who is not here to defend himself.
It is stretching it to call him a person.
We did not ask any of those questions of multi-billionaire media moguls when we were writing down their debt, but I am dealing with people who tell me they are on the verge of suicide because their debts will not be written down. I spoke to a man last week who told me he had three bottles of wine in his house left over from a couple of years ago. He had not touched drink in a while. He put them on the table in front of him because he did not know where to go. He got all of his tablets and put them on the table in front of him. He was going to kill himself because he could not pay off his banking debt. The dog put his paw on his knee and the man decided not to do it. A good job he did not do it but he never would have thought about killing himself in the first place if he was treated the same way as multi-billionaire media moguls being protected by the Government.
We would imagine foster carers would be all right, that the banks would not see them as fair game. They certainly did not see them as fair game when they handed out the loans, they did not allow for foster care payments when deciding what loans they would offer. Now, a family has come to me in distress with a mortgage the bank should never have approved in the first place because it was unsustainable and they have been told they will have to hand over their foster care payments. That child, who is from a difficult background, will now have to live in a house where the new parents will struggle to put food on the table and the child will be denied the shared cultural experience of watching sport on television and will not have the same standard of living as anyone else because they are fair game for the banks, but the multi-billionaire media moguls are not.
Those people in this republic are worrying about whether they will be able to keep being able to foster in the long term. As I am sure the Minister of State is aware, it is difficult enough to get someone involved in foster care without attacking the cohort of those people who have serious banking debt, thereby lessening numbers even further.
I did not expect this Government to be perfect. We knew what we were getting in the tin with Fine Gael on the label. We knew it would be a right-wing Government, but when people voted for the Labour Party, they voted for some form of socialism. They did not vote for welfare for the rich and punitive terror for the poor and most vulnerable and society. I will vote against this Bill and I will certainly not facilitate the Government in evicting people from their houses. May the Government feel their wrath if it does this.
I am delighted to be able to speak on this Bill but I am ashamed and saddened to think that with a Labour Party Minister of State in the House, in the year of the 100th anniversary of 1913 and big Jim Larkin, that we are bringing in this Bill to deal with the Gunn judgment as if that judgment was wrong.
I cannot understand what this Government has against ordinary people. I cannot understand why it will not accept the judgment of any court. I will speak again about the Supreme Court judgment on the children's referendum, where five judges of the court found the Government had acted wrongly and had misappropriated money. In actual fact, in a court case today a senior official admitted the Government paid too much for advertising. Easy for it when it did not have to raise the money, but we are where we are.
This Bill is an effort to continue the mockery and charade that protects the so-called rich, the blackguards, the so-called developers, bankers, former politicians and regulators, and the guy who was sent off to Brussels at all costs, even though he failed the interview. He had to be sent anyway because he knew too much. It is disgusting to think that the Government is here with its bully-boy majority, but when a colleague in the Technical Group had a wonderful motion on Private Members' business last night, about organ donation, the Government paid lip service to it. There was not a single Labour Party Member in the House. The Minister of State spoke for seven minutes out of 15, and the debate had to be suspended when she stopped. She did not have it in her brain to keep going for 15 minutes. That shows the interest the Labour Party has in the people. Labour Party Members went up to Meath East to canvass in the by-election and were rejected for their liberal policies. They did not want to know about bread and butter issues. They wanted to talk about gay marriage and whatever you are having yourself. They got their answer. I do not know where they will hide but they cannot hide anywhere. I do not know what vendetta they have against the people.
I heard the Labour Party when it was in opposition. I was over there for some time myself. I fell out with my party because of its policies. I voted for the bank guarantee and it was the biggest mistake of my life. I have regretted it ever since. The Tánaiste used an awful word against the former Taoiseach, although it might have had some merit. What happened when he entered office? He put on the same clothes and continued to support the people he had previously denigrated, perpetrating the biggest cover-up that ever existed in this State. There was a cover-up of the shenanigans and blackguarding that went on with politicians, regulators, bankers, chancers, speculators, the Europeans and the senior bondholders the Tánaiste was going to burn hotter than the fires of hell. Now he has allowed them off scot free in spite of the fact that they had their shady investments insured and they got their money anyway. The Tánaiste wants to penalise the ordinary people of the country. It is shenanigans. It did not happen in Cromwell's time. The Government is just as bad as him.
This is the second Government that is going to do this. I do not know what it is afraid of. I have asked again and again who the Government is protecting. I am talking about this Government, the pervious Government and the permanent government, the lads in the State cars and offices with the Ministers, and the lads who escaped the pension levy. No one else escaped it except a cohort of senior civil servants because they twisted the arm of the late Minister for Finance. It is disgusting. Ordinary people had to pay it while they got off with it.
This is a Bill that will persecute people before there is any banking inquiry to examine what the banks got up to. Four years later, there is still no banking inquiry.
This Bill does not protect the family home, which is sacrosanct. The bank can refuse a resolution under a mortgage arrears resolution process. Banks are calling the shots. They wrote the Bill. We see how they move around. I will not mention any names but there was one in the Central Bank who is going back to Lloyds TSB. It is a merry-go-round. Lloyds TSB is the company that allowed Bank of Scotland (Ireland) to rob the country and now it is robbing the British taxpayer. I am going to raise this at the meeting of the Inter-Parliamentary Union and I hope to get some support there.
Complaints to the Financial Services Ombudsman of Ireland could take nine to 12 months. People do not have the time. They cannot put food on the table.
This Bill will involve the courts in negotiations. Is that the function of judges? Judges are busy people. They have a job. The separation of Government and the Judiciary must be protected, and we saw the shenanigans lately with our wonderful Minister for Justice and Equality who wants to torment everyone.
Three hundred thousand people are in trouble at present and more will be in trouble before this Government is finished doling out this punishment. The people are being punished for the mistakes of the bankers. That is the order of the day. I am shocked because the Minister of State, Deputy Perry, has a small business background. He should know well what is going on. He does know but he failed to disclose.
The people have not received any help or bailouts from the State during these unprecedented times. The ordinary people got nothing. That is the preserve of a small few. The Gunn ruling to which I referred earlier that the Government proposes to overturn or ignore is not a legal loophole. It is the law enacted by previous Parliaments.
This Government has an obligation to protect the citizens of the State from eviction. If it fails, who will benefit? The banks will have to house the citizens of Ireland. The State will bear the cost while the banks ride roughshod over corporate governance and individuals' rights. It is unbelievable.
I am in negotiations currently with both the Revenue Commissioners and the sheriff in Limerick, and the blackguarding an ordinary family is getting in west Limerick is disgraceful. Machines can be seized. The sheriff can arrive today, make a deal with someone and come back three weeks later and tear it up, even though he signed his good name to it. In one case he seized the man's goods and chattels and, under Garda escort involving two or three patrol cars, gave them to an auction house in Dublin. That was done without any resistance. It was to show that very sick man that the State can do what it wishes. The blue lights were flashing, no one was resisting and the goods were brought to an auction house in Dublin. The goods were then advertised without VAT being charged. I was told today that under a 1972 Act, Revenue does not have to charge VAT. It is a matter for the auctioneer to charge VAT on his or her profit. The goods can then be sold for half the value. This man's goods were sold last Saturday, but because of the low deposit, they have to be sold again. Revenue does not care. It issues the warrant and the sheriff goes off, and he gets his fat charges. He gets all his money and therefore the misfortunate taxpayer gets nothing out of it. It is downright blackguarding. It did not go on in the days of the Penal Laws. It did not go on when we were trying to get rid of the British and Cromwell out of our country. What is going on here is disgusting.
Our banks do not have a code of practice. The Central Bank has a code of practice but it is useless. It is toothless because the banks are allowed do this. Many of these repossessions are taking place without a court order. They only have to wave a bit of paper because in many cases the members of the Garda Síochána do not understand what is going on and will not insist that the proper paperwork is shown. Bully-boy tactics are being used. I raised that here last week with the Ceann Comhairle. They are hit men. A third force - a militia - is going out, beating up people and leaving them nearly dead on the road. I have photographic evidence of it. The Minister can shake his head but it is happening. Thankfully, it is being investigated by An Garda Síochána. Many of these people are not even from our country. They are hired from other countries because the Irishman might be known. It is unbelievable.
The Government has protected bankers for long enough. It is time to protect the citizens of this country. When will we decide to protect the citizens?
This Government is allegedly in charge but it is responsible for the growing chaos in the country and it will be held accountable for its actions by the citizens of the nation, and by history. The sooner that happens, the better.
Article 41.1 of Bunreacht na hÉireann states: "The State recognises the Family as the natural primary and fundamental unit group of Society, and as a moral institution possessing inalienable and imprescriptible rights". What has happened to that? We all sign a pledge when we come into this House but where is that now? We are ignoring our Constitution that was fought so hard for and that has served us well for so long.
Article 40.5 states that the dwelling of every citizen is inviolable and shall not be forcibly entered save in accordance with law, yet men are arriving at houses with keys, breaking down the door and changing the locks. A month ago in this city an unmarried mother in this city went to the shop with her child to get a bottle of milk, and when she returned, she met these fellows who were sent out by an insolvent bank that had no licence to trade. When she rang her landlord and he rang the Garda, they fled, having changed the locks and locking her out on the street at 9 o'clock.
Article 40.1 states: "All citizens shall, as human persons, be held equal before the law." My goodness. Is the Government going to pass another law? Ye passed it at Cabinet last night to deny the unborn the right to live. Why would you not because you do not care for the people who are living, no more than the people who are unborn? You will burn in hell for it, that is all I will say - burn in hell for it, Minister. The Taoiseach, Deputy Kenny, wrote to people before the last election pledging-----
Will the Deputy stick to the subject?
I am sticking to the subject. It is all relative, a Cheann Comhairle. We are getting one piece of legislation after another to damn the people. To hell or to Connacht, or wherever. It is unbelievable.
Article 40.1 states:
All citizens shall, as human persons, be held equal before the law.
This shall not be held to mean that the State shall not in its enactments have due regard to differences of capacity, physical and moral, and of social function.
Article 40.3.1o states: "The State guarantees in its laws to respect, and, as far as practicable, by its laws to defend and vindicate the personal rights of the citizen." The Government has abandoned the people. It has told them to go to the courts, and it is trying to make the judges be negotiators or mediators. A mediation Bill is proposed. There are professional mediators who could help but that Bill will not be moved on because it might upset vested interests in the legal progression.
Article 40.3.2o states: "The State shall, in particular, by its laws protect as best it may from unjust attack". Article 43.1.1o states: "The State acknowledges that man, in virtue of his rational being, has the natural right". Article 43.1.2o states: "The State accordingly guarantees to pass no law attempting to abolish the right of private ownership or the general right to transfer, bequeath, and inherit property." However, here we are at the beck and call of the banks which condemned the Gunn judgment because they say it is a loophole. It is not a loophole. It is the law, and the good Ms Justice Dunne was only upholding the laws of the land, but we will browbeat her.
We are facilitating corrupt, unlicensed financial institutions above the needs of citizens. That is happening every hour of every day in this country. Some months ago I occupied a bank in this city because of the way it treated people in Wexford. They waved a hire purchase agreement at me and told me that was more powerful than any court order. That is the arrogance and contempt they display because they know they will get away with it. The managing director of that particular bank told me and six other people, two of whom had been severely beaten and a boy of 15 who was almost killed on the side of the road.
We are bringing in legislation that will give legal credence to assisting fraudulent financial institutions. That beggars belief. It would not happen in any other country. This must be the greatest banana republic of all time.
Current mortgage agreements are in contravention of the Unfair Terms in Consumer Contracts Directive 93/13/EC. That is a directive of the European Union - then called the European Economic Community - governing the use of surprising or onerous terms by business in dealings with consumers, but we will pass this law and another law just to suit these people. We passed financial resolutions here the night we debated the promissory notes legislation. I spoke against it. I tried to table an amendment. Following the debate I crossed the floor to speak to the Taoiseach, Deputy Kenny, and the Minister, Deputy Noonan. I told them what they had done to Seán Quinn and the other people who had court cases pending against IBRC that they could not continue because of that legislation. Any eejit would know that. A person has a right to go to court but we simply banished that right. Thankfully, Seán Quinn was able to go to the courts because he could afford it and challenge that. It was total nonsense. If I or anyone else had a court case pending, we could not pass a law here to deny the rights of any citizen.
This Government is punch-drunk believing it can do what it wishes at the behest of the bankers, the chancers, the gangsters, the speculators and the people who wreaked havoc on the country. They destroyed the country, and not one of them has been arraigned. The former Minister of State, Ned O'Keeffe, was brought before the courts in full view of the television cameras for some discrepancy involving some €100. I do not know whether he is guilty or not. That will be decided in time.
The Deputy should try to avoid mentioning names.
I have his permission to mention him. He was a good Deputy and a good Minister of State. He had to be dealt with, but we cannot bring the bankers before the courts. We see the merry-go-round that is going on. They are moving between top executive jobs. Another one of them is going off to join Lloyds, and more are coming back here.
We had a case involving two brothers recently, one in the bank and one in the courts. One of them said that what was going on was reprehensible and wrong.
I thank you for your forbearance, a Cheann Comhairle. I will hand over to my good colleague, Deputy Michael Healy-Rae.
I thank Deputy Mattie McGrath for allowing me some of his time. The Government should have called the Land and Conveyancing Law Reform Bill what it is. Some people in the Visitors Gallery might have just arrived and might not know what the Bill is about. The Government is making it easier for banks and lending institutions to repossess and take over property and businesses. It is making it easier for banks to take property and homes back from honest-to-God people who work hard and try to do their best. I am baffled at how Fine Gael and Labour Ministers and backbenchers can stand over this Bill given the crisis families and businesspeople are going through at present. It is introducing a Bill making it easier to take property away from honest-to-God, hard-working people.
People took out mortgages in good faith. They were being told at the time by those writing in the national press and others to get on the property ladder before it was too late and that they would be left behind if they did not buy then. They did their honest-to-God best and scrambled together whatever bit of money they could. The bankers were jumping out the windows trying to give them the money. What do we have here tonight? After bailing out the banks and the Government doing everything in the world to help and facilitate the banks, we are again going after the vulnerable people. We are again going after the families who are struggling and trying to put food on the table.
I could swear on the Bible that I know people living in homes without electricity tonight. The reason they do not have it is that they are in arrears, cannot pay the bills and their electricity has been cut off. What is the Government's answer to that? On the first day of May, today, it put a carbon tax on coal and bales of briquettes making it impossible for them to be able to buy a bit of fuel for the fire when the winter will come around again. The Government is acting disgracefully. Government Members are a shame and a disgrace. To bring this Bill before the House tonight shows that the Government, because of its massive majority, is holding the people in utter contempt. Government Members have no understanding of how families are struggling to survive, trying to send youngsters to school and buy them books and uniforms. They really cannot manage. They are doing their level best. The Government hit them with a property tax and hit them with water charges. It is trying to plunder the ordinary worker in every conceivable way it can.
Last week a Minister would not use his vote to register his opposition to a banker getting €850,000 a year. How can Government Members try to stand over it? It is ridiculous. They were the people who said Fianna Fáil was wrong and that they would do everything right. The vast majority of the people believed them and thought they had the best interests of the people at heart. If they have, they have a funny way of showing it because they are again hurting the people tonight with the Land and Conveyancing Law Reform Bill. Who thinks up these names, which are beyond belief? Why not call it what it is given that it will hit vulnerable people and make it easy for the banks to repossess property?
The eviction Bill.
The Deputy is correct. It would be more in order to call it the eviction Bill than the Land and Conveyancing Law Reform Bill. The people will not forget how they have been treated by Fine Gael. They certainly will never forget how they have been treated by Labour. We often hear of politicians who try to dodge elections and would try to put off an election. I would never be afraid of an election any day of the week because we can face the people in an honest and straightforward way but, by God, Government members have a lot to be responsible for. On top of it all - the geniuses that they are - they decided to put a carbon tax on solid fuel at a time when it is centralising functions from around the country to make it impossible for people to access medical cards and student grants. One cannot even get a driver's licence in County Kerry because the Government has centralised that also.
I voice my total and absolute opposition to this. Although I was not in the Chamber, I heard all the speakers who spoke in opposition to this, including Deputy McGrath who gave a great overview of the whole situation. I got under the skin of the Minister of State on another night when I highlighted the broken promises about upward-only rents. The Government parties made all types of promises before the election and the first thing they did was to break those promises just as they have broken every other promise they made. It is the Government of broken promises and shame on all its Members, including those people supporting from the back benches - the silent lambs who support every bit of rubbish the Government comes up with.
There has been considerable scaremongering about the Bill, some of which is opportunist, populist and disingenuous. All of the Opposition speakers I have heard in the past hour and 35 minutes I have been here have been guilty of that. Sinn Féin is opposing the Bill. The logical conclusion of that is that Sinn Féin in the North should basically delete the equivalent provision for repossession under mortgage legislation in the North. If that is what it wants down here it should do the same up in the North. Of course, it will not do that because it is in government there. I suppose it is the bad cop up there and the good cop down here. Acting and behaving like that just has no credibility.
Deputy Mattie McGrath was a Member of the previous Dáil as a member of the main Government party. He only jumped ship from that party over the stag hunting Bill. He supported everything else the Government did back then.
He supported this repossession provision in the law back then.
The Land and Conveyancing Law Reform Act 2009 was passed on the understanding that this repossession provision still applied.
Sometimes I am in the Chair and I know Deputy Mattie McGrath is a very good speaker, but today he really lowered the discourse. It is wrong to wish that his fellow Deputies should burn in hell, which is inappropriate language. I do not know if it is allowed under the rules. He should show a bit of decency and respect in a democracy.
I obliged the Deputy by speaking early.
That is the freedom of speech within a democracy, but it is wrong to say something like that.
On a point of order, I spoke 20 minutes early to accommodate the Deputy, who was in the Chair at the time, given that there was nobody here to speak from Labour.
Deputy Tuffy is entitled to say what she is saying.
I am just saying I came in and spoke 20 minutes earlier.
He did and we all agreed that he could share his time. However, it is not right in a democracy to use terms he used regarding his colleagues.
Does the Deputy think it adds to it to put the legislation through?
I do not remember anybody in the then Opposition saying that to the Deputy when he was on the Government benches.
Deputy Healy-Rae also used language that was over the top. He forgot to mention the councillors who were going around rezoning all the land for unnecessary development that was part of the property boom that caused the financial crisis. It is convenient to say it was all about the bankers.
What has that to do with it?
It has a lot to do with it.
Members should speak through the Chair.
Councillors in the Deputy's part of the country were rezoning land that did not need to be rezoned.
Is the Deputy making an allegation against me because I was the chairman?
No. I am not making an allegation against him.
I ask Deputy Healy-Rae please to allow Deputy Tuffy to speak. He dished it out so now he should let other people reply to his points in the debate. That is the art of democracy. I ask Deputy Tuffy to proceed.
I am most certainly not making an allegation.
People are entitled to reply to a debate and it is up to me to ensure fair play on both sides. I ask Deputy Healy-Rae to allow Deputy Tuffy to speak without interruption.
I am most certainly not making that-----
The Deputy was mad to call to Kerry one time.
I ask Deputy Healy-Rae to stay quiet or leave the Chamber.
It happened in every county in Ireland.
I think I will leave because I will not listen to this.
The Deputy does not like it-----
Will Deputy Healy-Rae leave the Chamber?
I will. Eaten bread is soon forgotten.
The Deputy does not like it being mentioned. It is not all about the big bad Government and the bankers. A lot that went on in this country led to where we are, including local authority members rezoning land that did not need to be rezoned.
Mainly in Dublin.
It was all over the country but the Deputy is right, it was in Dublin.
The Bill will reinstate a provision for repossession which was always there but, as people have said, was put in doubt by the 2009 legislation and its subsequent interpretation by the courts. When it was passed it was on the understanding that the repossession provision would apply. It is absolutely wrong for people to say it would make it easier to repossess. This is not the case. It reinstates the situation as it was and introduces an amendment which makes it more difficult to repossess. This is the factual situation. If people were truthful about it we could have a much better debate.
This is a country where we have mortgages and people own their own properties. Mortgages are given on the basis of undertakings by the mortgagee to the mortgagor. This is how it works and what underpins the transaction. If we do not have this the entire thing would collapse. We expect people to comply with their undertakings. This is the basis of how our society is organised. What about a millionaire? The point has been made by speakers that some millionaires seem to get away scot free, and this should not happen, but it does not mean we should undermine our entire law with regard to mortgages, which has been in place for hundreds of years. Mortgages are issued on the basis that this is the way it works.
I agree more needs to be done to help people in mortgage distress. Section 2 of the Bill includes such steps as do the personal insolvency provisions. Many people speak about the need to be able to write off debt. The personal insolvency regime allows for this and it is in place. We have also taken many other steps. More needs to be done in this regard.
A few people have mentioned the FLAC submission which we all received by e-mail today. It proposes amendments to the legislation on the basis it accepts the need for the legislation. It does not state it should not happen or that one should not be able to repossess. People came here and spoke about FLAC but do not want the legislation, which is contradictory. FLAC made several points, and I hope the Minister and the Government will examine some of the issues it has raised. I will not go into the detail because I do not have time. FLAC spoke about the two-month period mentioned in section 2(2) and speakers here also raised this issue. I do not know whether FLAC or the speakers noticed that section 2(4) allows for further adjournment of the proceedings concerned where it is considered significant progress has been made on proposals for personal insolvency. Perhaps this needs to be examined further. FLAC has made a number of other points and I hope the Minister will examine them to see whether they are necessary.
Other steps must be taken. It is a statistical fact that we have a low level of repossession in this country and we should keep it this way. I support those speakers in the Opposition who stated this and we should do more to help. There needs to be more State intervention to help people stay in and keep their homes. In 2010 a report was done into market indebtedness which recommended with regard to mortgage interest supplement that the requirement one must be working part-time should be abolished and people working full-time should be able to qualify once they meet the means test requirement. This report, and the Department of Social Protection's review on the mortgage interest supplement, recommend the means test criteria be revised. Neither of these measures were taken. There has been a drop in the number of people qualifying for mortgage interest supplement while at the same time the number of people in arrears has trebled and this needs to be examined.
The Land and Conveyancing Law Reform Bill 2013 is a mean bit of proposed legislation to give back to the banks the terrifying power over homeowners who purchased prior to 1 December 2009 and who might have been in a position to benefit from the repeal of section 62(7) of the Registration of Title Act 1964 in that their homes could not be repossessed by virtue of this repeal.
What is extraordinary is that the Government, instead of devising bold and imaginative new ways of dealing with and resolving the huge issue of mortgage distress in the State on the part of homeowners, can only think of one recourse which is to give the financial institutions draconian powers over homeowners even when this can mean people in mortgage distress being evicted from their homes as a result of the disaster which was allowed to develop in the period from approximately 1997 to 2007, what we now know as the property bubble.
What is shown here is that the Government of Fine Gael and the Labour Party is utterly beholden to the banks and, in a wider sense, beholden to the dictatorship of the financial markets which really rule the European Union in terms of financial and economic policy. The Government, like Governments throughout Europe, will tolerate nothing except that the sharks which dominate the markets have all the power they demand over the small fish in the pool.
In this sense the attitude of the Fine Gael-Labour Party Government here towards the massively powerful financial markets on the one hand and the small people on the other reminds me very much of the moral underpinning of the plays of William Shakespeare. In Shakespearean drama anything which threatened the established feudal order and the divine right of kings of the day is seen to bring chaos and disorder, and equilibrium can only be re-established when the small people know their place, which is being subject to the monarchical dictatorship of the day, which has the divine right to rule and does so with a vengeance. This is the underlying policy of all the right-wing governments of Europe at present.
The Labour Party and Fine Gael from their first day in office have ruled on exactly the same basis as their Fianna Fáil predecessors. They prostrate themselves at the altar of the financial markets, the banks and the financial speculators, known popularly as the rulers of the universe, and anything which would challenge this system and anything which would provide a practical solution to the huge problems of debt, and mortgage debt in particular, of ordinary people will not be entertained because there is a veto by the bankers, bondholders and speculators who dominate the financial markets of Europe.
Alternative approaches to this situation are possible. It is possible to implement radical solutions to the crisis of mortgage debt. It would mean writing down to today's prices the value of homes for which ordinary people were forced to pay massively inflated prices during the bubble. Monthly mortgage repayments could then be calibrated accordingly. That would provide a basis for a solution to the horrific crisis of mortgage distress faced by up to 180,000 householders. Naturally, the establishment, right-wing media and right-wing commentators would snort in derision at any such proposal. However, let us examine both the morality and the economics of this situation.
I was a Member of Dáil Éireann from 1997 to 2007, which coincided fairly closely with the beginning of the property bubble, which became the craziness in the Irish property market, up to its penultimate year. Mine was perhaps the only voice in the Dáil that, at many stages over those ten years, raised the issue of the rapid and dizzying escalation of house prices and their effect on working class people.
The Government of the day - Fianna Fáil and the Progressive Democrats - was legislating for this and facilitating it in every way. The dominant ruling party, Fianna Fáil, regularly entertained the instigators, and those who benefited from this situation to the tune of billions, in, for example, in the party's tent at the Galway races. In opposition, however, Fine Gael did not once raise a principled objection to the type of profiteering that was having a devastating effect on young working people who needed to put a roof over their heads if they wanted to begin a family or for whatever reason. They were forced into paying these massive house prices, with mortgage terms going from 20 years up to 30 or 40 years. At the time, I cited the example of a young post office worker who related his experience to me. An average new home in the Swords area cost him €375,000 and he was forced to take out a 39-year mortgage. I got a bank worker to estimate that, at an interest rate of 4%, the total repayments of that worker and his partner would be €750,000 over the 39 year period. If interest rates went to 6% the total repayments would be €1 million.
About 50% or €200,000 of the €375,000 sum that young couple were forced to pay for their home would have been sheer profit for the developers, depending on the prices they had paid for the land. To describe it as profiteering would be mild - it was racketeering to an incredible degree, with young working people as the victims. That situation was validated in the media of the day. Those responsible for the situation, including builders and developers, were lionised and glorified in the media, while the politicians courted them. The whole system supported that massively immoral situation.
That generation, who are now in negative equity, has been left with unsustainable mortgage levels as their wages have been cut or they have lost their jobs. Even from a moral perspective they are entitled to expect the State and the Government to make amends for their situation. Therefore, rather than caving in again to the banks in this Bill, which will give banks the right to evict these young victims of the building bubble and the profiteering of that time, it would be better to say that those crazy prices should be written down to today's values and the monthly mortgage repayments should also be written down. At a stroke, that would not only relieve huge distress and pressure on so many people, but it would also free up the literally billions of euro to go into the domestic economy that now go straight into the banks in mortgage payments. It would give a much needed shot in the arm to the retail sector, thus underpinning the jobs of shop and service workers who are suffering so much because of the austerity policy.
A few months ago, when the banks' representatives attended the Joint Committee on Finance, Public Expenditure and Reform, Allied Irish Banks provided some very interesting information. At the time, its total residential mortgages amounted to €41 billion. Some 34,000 mortgage accounts had been subject to forbearance, with 66% of those being interest-only. Therefore, instead of a radical solution we now have a whole cohort of people shackled and imprisoned in an interest-only situation. It will go way beyond the 39 or 40-year limit if this system prevails.
AIB said the quantum of negative equity was €6.8 billion. In other words, to write down the mortgages' total value to today's real value would cost €6.8 billion. Is that so much against the €64 billion that was put into the banks generally? That is the type of radical thinking we need for a solution. It is not possible, however, on the basis of the crazed logic of the system today. It would be possible in a situation where banks and financial institutions were in public ownership, under democratic control and run for the benefit of the majority in society, rather than for shareholders and the elite who dictate policy.
Molaim athló an díospóireacht, a Cheann Comhairle.
Go raibh maith agat. The Deputy will have five minutes left when he resumes the next time.