Business of Seanad.
Order of Business.
European Judicial Network in Civil and Commercial Matters: Motion.
Housing (Miscellaneous Provisions) Bill 2008: Order for Second Stage.
Housing (Miscellaneous Provisions) Bill 2008: Second Stage.
Human Body Organs and Human Tissue Bill 2008: Order for Second Stage.
Human Body Organs and Human Tissue Bill 2008: Second Stage.
Business of Seanad.
Credit Institutions (Financial Support) Bill 2008: Second Stage.
Credit Institutions (Financial Support) Bill 2008: Committee Stage.
Chuaigh an Cathaoirleach i gceannas ar 10.30 a.m.
An Cathaoirleach: I have received notice from Senator Ciaran Cannon that, on the motion for the Adjournment of the House today, he proposes to raise the following matter:
I have also received notice from Senator Frances Fitzgerald of the following matter:
I have also received notice from Senator Shane Ross of the following matter:
I have also received notice from Senator Nicky McFadden of the following matter:
I have also received notice from Senator John Paul Phelan of the following matter:
I have also received notice from Senator Pearse Doherty of the following matter:
I regard the matters raised by Senators as suitable for discussion on the Adjournment. I have selected the matters raised by Senators Cannon, Fitzgerald and Ross and they will be taken at the conclusion of business. The remaining Senators may give notice on another day of the matters they wish to raise.
Senator Donie Cassidy: The Order of Business is No. 1, motion establishing a European judicial network in civil and commercial matters, to be taken at the conclusion of the Order of Business and conclude within 30 minutes, with the contributions of spokespersons not to exceed five minutes; No. 2, Housing (Miscellaneous) Provisions Bill 2008 — Second Stage, to be taken at the conclusion of No. 1 and adjourn not later than 4 p.m., if not previously concluded, with the contributions of spokespersons not to exceed 15 minutes, those of all other Senators not to exceed eight minutes and Senators may share time; and No. 3, Private Members’ Bill, Human Body Organs and Human Tissue Bill 2008, to be taken not later than 4 p.m. and to adjourn not later than 6 p.m. I also advise the House that on receipt of the Credit Institutions (Financial Support) Bill 2008, I intend to amend the Order of Business to enable the House to take all Stages this evening and to take a motion for earlier signature on the completion of the Bill. The business of the House will be interrupted from 1.30 p.m. to 2.30 p.m.
Senator Frances Fitzgerald: Yesterday, legislation was introduced for the biggest economic policy decision taken in this State. As Senators will have seen, this was done in a chaotic manner as the introduction of the Bill was repeatedly subject to delay. While the Fine Gael Party supports the legislation, it is cautious about many of its aspects.
I am concerned by the tone of some of the debate on this issue. For example, I have heard Ministers and others state that the legislation only provides a guarantee. I caution against this type of thinking because providing a guarantee to the banks for such a substantial amount of money is not without risk. My party and some commentators have spoken about this issue. There is a risk that borrowing costs will increase. We also hear the banks may have bad debts of up to €80 billion. The amount effectively being underwritten by the taxpayer has been estimated at between €100,000 and €200,000 per man, woman and child in the State. The sums of money involved are enormous.
If parents decide to act as guarantor for a young adult taking on a mortgage, they consider the matter very carefully. They know their child and weigh up the risks. The State, in taking this decision, is effectively guaranteeing the family home of the economy. The questions Fine Gael has asked relate to what regulation will be introduced and how we can guarantee the banks will not behave in a similar manner again by lending money to property developers to buy land at inflated values. Many people are concerned that we might see this sort of practice in the banks again, which would make it even more difficult for the first-time buyer. We must be very careful about this oversight and need to hear from the Government about the type of regulation that will be put in place because it is clear, as I said yesterday, that the regulations that were in place have not worked.
Some Members, including Senator Ross, have been speaking about this for a long time. Do we know the banks well enough, as well as a parent knows his or her child, to be giving this sort of guarantee and what sort of safety net can we build in for this economy? I welcome the fact that the legislation probably will be before the House later this evening and that we will give it the utmost scrutiny.
On a related point, a story is carried in the newspapers today on an issue we discussed in the House on a number of occasions, namely, the M50. Up to 20,000 people have received fines and notices that they should not have received. This concerns the use of a bridge that has not been managed well. We are now talking about the management of our entire banking system. There are many lessons the Government has to learn about management, as we have seen from the many decisions it has taken in recent years. We have had very poor management and very poor oversight——
Senator Jerry Buttimer: Hear, hear.
Senator Frances Fitzgerald: ——of the spending of the money of this economy during what has been called the Celtic tiger. It is essential that we see better management in the weeks and months to come, especially in the banking sector.
Senator Joe O’Toole: I wish to pick up on the same points touched on yesterday and to which we attempted to get answers yesterday afternoon from the Minister of State, Deputy Mansergh, who was extraordinarily coy and reluctant to share information or views with us. One matter about which we know more now than previously is that the banks found it easier and cheaper to get credit yesterday. The Minister of State made the point yesterday that he was quoting the Taoiseach when he said the banks would be forced to pay a reasonable charge. To me the charge is clear; it is the difference between what the banks were paying for money yesterday and what they were paying for it the previous day or what they are paying for it today. That is the value they have got. That is the value the taxpayer has given them and the value they need to pay back to us for our covering their risk and liability and for allowing them to do their business and to trade in a way they were not able to a week or three days ago. We should be insistent on that approach.
No more than any kind of insurance policy, a clear excess clause should apply to the banks. It was my understanding that it was the Government’s intention to apply one, but to date that has not been written into the legislation. If one crashes one’s car, one is liable to cover the cost of the first few hundred euro of damage. In this situation, the first drawdown should be from the banks. That is a guarantee we must be given. It is a straightforward matter. It is no more than what would apply to one engaged in any commercial operation.
One issue not mentioned by the Government but raised by Fine Gael is the question of having a State representative on the banks’ risks or credit committees. I agree with that idea, but I also believe other people should be represented on the banks’ boards. The boards should be dissolved and reformed——
Senator Mary M. White: Hear, hear.
Senator Joe O’Toole: ——to deal with this and taxpayers should be represented. That seems an obvious requirement. I am pleased the legislation will give the State the authority to take equity in some of these companies and to examine their subsidiaries.
An issue raised here time and again and by those involved in the regulatory area — we have the Oireachtas Joint Committee on Economic Regulatory Affairs — is that the power of the Financial Regulator needs to be strengthened. I argued in this House nearly ten years ago for authority to be given for the free flow of information between the Office of the Revenue Commissioners, the financial authority and the offices of the other regulators in the State. There was major objection to that proposal in this Chamber and a watered-down version of the legislative measure was eventually passed. We are now talking about why the Financial Regulator is not doing his business.
Another suggestion rejected by this House was that each director of a significant company should be required, in end of year directors’ statements, to state that the company concerned has traded properly and correctly within the law. That was opposed by all the major players in the business section and all the accountancy bodies and a watered-down version of the measure was passed, the effect of which means nothing at the end of the day. It is time we revisited these issues to make sure they are addressed. I ask that we reconsider them.
I wish to raise another point which I ask Members to seriously consider. Some Members of this House are long serving and I have served here for 20 years. I was appalled at the salaries, terms and conditions, etc., of Members of the Oireachtas when I came to this House. I could not believe that any group of workers at any stage in life could be so disorganised and badly represented in terms of dealing with salaries. I was involved in the 1992 negotiations, of which I am proud, which dealt with some of these issues. It was a time when we heard stories of political widows in particular who found themselves with not a shilling of a pension because irresponsible husbands, who were Members of this House, or the other House, had bought out their pensions because they had lost an election and needed the money for good reasons or whatever. Consequently, their widows were left with nothing. People were trying to deal with their cases.
In 1992 we made a comparison between Members and other workers. If other workers lose their jobs, there are provisions such as redundancy, notice and a fair movement into and out of employment. The deal that was done at that time was that in lieu of redundancy and notice — if a Deputy or Senator loses his or her seat, he or she is immediately out of a job with no notice, which was unfair to ask of any group of workers whoever they might be. I would say the same if I were talking about teachers, general operatives, painters or any other group, and Members got paid a month’s salary for every year of service in rough terms. Apart from that they got no more than any other public servant who would have notice and termination provisions built into his or her contract.
There is a responsibility on every Member of this and the other House to defend and explain that to ordinary people, even if it is irresponsibly dealt with in a populist media. We must remember, as is well known to some of us who have spent our lives involved in trade unions, that nobody ever cheers when some groups of workers get anything. We should simply ignore that and not expect it to be a popular view, but it is a reality that should be put forward, defended and protected.
Senator Alex White: It is misleading for anybody to give the impression that the package proposed in the legislation currently before the Dáil does not come at a cost to the State and the Exchequer. The extent to which that was suggested, implied or, I believe, stated by the Taoiseach yesterday was that no money is changing hands. On the face of it, that is true, but it is only half or a very small part of the picture. First, there is the obvious cost associated with a risk, namely, if this guarantee is called upon at some point in the future. The guarantee would not be given or would not count for anything unless there was a prospect or a possibility at least that it might be called upon at some point in the future. That is a cost or at least a contingent cost or liability.
A second cost, to which Senator Fitzgerald briefly referred, is that there is a real risk that the ability of the Irish State to borrow and the interest rates that will be charged on foot of those borrowings will be affected by this. There is a real risk that will occur. That takes the matter into the political arena. It was always a political question but it makes it a highly political question for us and a huge issue in terms of the democratic dimension for these Houses because it affects the ability of the State and the Exchequer to expend money on public services, including health. The Minister for Health and Children said yesterday that the likelihood of increases in expenditure on health would be negligible in the coming period. There is a not even a potential but a very real and likely cost to the State.
This brings me back to the point I raised yesterday, which relates to these Houses and the effect or involvement we should have in this regard into the future. Other speakers have rightly asked for more detail from the Minister for Finance on how he will exercise the powers he will take on and the extent of the scrutiny that will be brought to bear on the banks, but what about the scrutiny in which the Houses of the Oireachtas should be involved in regard to these matters? I mentioned the issue yesterday in regard to the Joint Committee on Finance and the Public Service and said that perhaps we should consider having a more dedicated committee or facility for the Houses to examine the question of the banks. The Joint Committee on Finance and the Public Service dealt with this issue in July last and I took the opportunity last night to read the debate of that meeting. I suggest that colleagues examine the transcript of that meeting because, on any reading of it, one would not describe what occurred as a debate. It appeared, from what was stated, that there was no problem at all. The representatives of the various banks stated that there were no issues arising, that there were few loans at 100% and that there were no concerns. That was the tenor and level of the debate that took place in July.
What happened in the interim? We are aware of what occurred in the United States but what gave rise to the so-called catastrophe into which we were facing? The Houses should be involved in considering what took place during the past three months. Senator Ross is correct to state that the role of the Financial Regulator should be examined. What about the role of the Central Bank and Financial Services Authority of Ireland? There are already suggestions in the United States that there should be criminal investigations in respect of what occurred on Wall Street. I am not stating that something similar should happen here but there should be a role for the Houses in scrutinising what took place during the past three months that led us to the position that obtained from Monday night into early Tuesday morning.
For the past six to 12 months, people in pubs and restaurants throughout the city have been discussing the possibility of a major bank collapsing. We were informed yesterday that this almost happened. There is a complete disconnect between these Houses, the Members of which are the democratic representatives of the people, and what is happening in the real world.
This matter is relevant to the Order of Business and to the general business of this and the Lower House. In that context, I reiterate that we should put in place a mechanism that would allow the Members of both Houses to scrutinise what is happening in the banks, examine the extent to which the new facility being afforded to them will be applied and consider the sensible proposals put forward by Opposition spokespersons in respect of what will be the payback to the taxpayer in light of the real cost that arises on foot of this proposal.
Senator Dan Boyle: It is important that we should not prejudge the debate that will take place later today. However, it is also important that the concerns raised by Members be placed on record and form the basis of the wider debate that is likely to occur this evening. To date, I have not heard anyone state that there is no risk in what is being proposed. There is an undoubted risk. However, what the Government must consider is whether that risk is acceptable and whether the policy being proposed would give rise to a lesser risk than that attaching to other policy options.
In other jurisdictions, failing financial institutions have been directly purchased or given state support. Such interventions have resulted in a direct cost to the governments involved. The taxpayers in the jurisdictions to which I refer have already incurred a liability. The Government of the United States is offering to buy up the toxic debts incurred by banks in that country. This is a debt which is probably irredeemable. Once it is paid by US taxpayers, there will be no comeback.
The approach that will be adopted, and later debated by this House, is one where the risk has been measured and the likely cost to taxpayers will be reduced as a result. There is no doubt that the situation in which we find ourselves came about as a result of both a need for more appropriate regulation and large-scale irresponsible banking practices. Members should work together to ensure that these matters be dealt with in the context of encouraging better ethics through the introduction of legislation. The debate in which we will engage later will be the first of many that will examine existing legislation, particularly that which relates to financial regulation. I look forward to the Leader being able to make time available for such debates.
It must be stressed that what is being attempted will not be without difficulty. However, even in the short term and before the passage of the legislation through both Houses of the Oireachtas, it has already had a positive effect. In such circumstances, we can be confident that we are putting in place a framework that will allow us to deal with the current difficulties, which are partly local but mostly global in nature. I look forward to an open debate on the legislation.
I thank the Members of both Houses for engaging in the general debate on this matter in a way that has not been evident in the United States — the source of most of the problems that have arisen. The debate in the Houses of Congress has been nakedly political and those involved in it have not considered the wider interests of the global economy or their country’s political system. I am satisfied that our debate on the legislation will not be conducted on such terms.
Senator Paul Coghlan: Will the Leader provide an assurance that all banks licensed and regulated in this country will be brought within the scope of the legislation that is due to come before the House later? Members are concerned that Irish taxpayers who are dealing with the institutions which, at present, are definitely not covered by the terms of the Bill should benefit from the protection it is intended to offer, otherwise the Government risks creating the very conditions the legislation is supposedly designed to protect against. The level of risk will increase and there could be a run on one of the institutions to which I refer. God only knows the sort of enormous knock-on effect to which this could give rise and no one wants to contemplate the untold damage that could be done to the economy.
The institutions which, it appears, are not included under the provisions of the Bill would, if they were so included, be obliged to pay for the beneficial cover that would be provided by way of this insurance measure. We must ensure that the legislation we are due to pass later today will create a level playing pitch, otherwise the results could be disastrous.
I agree with Senator O’Toole on the need to urgently strengthen the powers of the Financial Regulator. There will be a need to reform and restructure some of the financial institutions in the near future. In light of the steps being taken by the Government, there will also be a need for State representation on the boards of those institutions when they have been reformed and restructured.
Senator Ivana Bacik: I am also concerned with regard to the Bill we are being asked to debate tonight. There is a real lack of clarity regarding what the taxpayer is taking on in respect of the legislation. Anyone who watched “Prime Time” last night would have been left even more confused with regard to whether the banks are exposed to toxic debts — one commentator was strongly of the view that they are so exposed — and whether there is a strong risk for the taxpayer as a result of the acceptance of this measure. If the banks are so secure, why do we need to bail them out? From listening to the stockbrokers and others in the banking sector who are defending and lauding the Bill, one might come to the conclusion, “They would say that, would they not?” They are, after all, the ones who are getting the good deal. It is difficult for any of us to decide whether the Bill deserves our support, which is a matter on which we will be obliged to engage in a detailed debate later today.
There appears to be cross-party agreement on the need for increased regulation in the financial services sector. There should also be increased regulation in respect of our greenhouse gas emissions and the targets relating thereto. A number of extremely worrying reports were published recently — they were eclipsed by the financial crisis — which show that Ireland is nowhere near meeting its Kyoto targets. In that context, I renew my call to the Leader and Deputy Leader for the Second Stage debate on my Climate Protection Bill to resume. I wrote to Deputy Barrett, Chairman of the Joint Committee on Climate Change and Energy Security, yesterday and requested that I be allowed to make a presentation on the Bill to his committee, which might then support it. I also request a resumption of the Second Stage debate on the Bill in this House. It is important that this should happen, particularly when we are considering the need for increased regulation across various sectors society.
Senator Eugene Regan: We are in a time of crisis and the Government has sought, and is getting, co-operation from Opposition parties. There is a lesson in this for the future, namely, that the Taoiseach and the Government should not be so dismissive of proposals put forward by the Opposition to improve the state of the economy. The tendency has been to ignore the Oireachtas and to dismiss Opposition proposals and many of the announcements relating to initiatives relating to the economy are made outside the Houses of the Oireachtas. Co-operation works both ways. There is an onus on all Members of the Oireachtas to co-operate in times of crisis such as this. That co-operation has been forthcoming but it works both ways.
The motion in regard to the European judicial network in civil and commercial matters will be taken without debate. I have no difficulty with that but point out that Ireland opted into this network in 2001.
Senator Donie Cassidy: I am allowing 30 minutes.
Senator Eugene Regan: Why is it necessary——
An Cathaoirleach: The Leader indicated there will be a 30-minute debate.
Senator Eugene Regan: A debate will take place.
Senator Donie Cassidy: Yes.
Senator Eugene Regan: I will reserve my comments until then.
Senator Michael McCarthy: BreastCheck wrote to a lady in the Cork region last week to arrange an appointment for a mammogram. Sadly for the family concerned, that lady has been dead for 20 years. This was brought to the attention of BreastCheck which said it was using records from the Department of Social and Family Affairs. However, that same Department has been paying a widower’s contributory pension to the deceased lady’s husband for the past 20 years, so it calls into question the manner in which BreastCheck is using information made available to it by the Department. It also calls into question the sections within the Department which are releasing information to BreastCheck stating that a deceased person is living in the Cork region but which are giving the husband of the deceased person a widower’s pension at the same time.
This has caused undue hardship and distress to the family. One could understand this happening within a three to five year period but this is 20 years later. BreastCheck has issued an apology which has been accepted in the spirit in which it was extended. However, there has been no word from the Department of Health and Children. It so happens that the husband of the deceased woman is a former Deputy. He contacted the Department of Health and Children and spoke directly to the Minister’s adviser but there has still been no word from the Minister on this issue. I am not saying the Minister is not compassionate and that it is deliberate, but it is a disgrace and shameful that any family should have to go through that hardship, distress and trauma. We need to ensure this does not happen again.
I wonder if something similar has happened to other families who would not have the wherewithal to raise this issue in political channels as has this former Deputy. Will the Leader ensure this does not happen again and that there is some political accountability because we have all become immune to apologies from the Department of Health and Children in regard to cock-ups in terms of diagnoses and services? This cannot be allowed to continue.
Senator Marc MacSharry: I join others in welcoming the opportunity to debate the Credit Institutions (Financial Support) Bill 2008 tonight. Not wishing to pre-empt what we might say on it, may we all share the wish for improved regulation and to minimise the risk and ensure we are most diligent in carrying out what we all hope will be a positive contribution to the economy? I look forward to a robust debate later in order that we can all contribute to improving that legislation and ensuring it is sound.
Following on from what Senator Michael McCarthy said about BreastCheck, it would be beneficial if we had a debate on the roll-out of BreastCheck. I fully sympathise with the poor family in Cork where a deceased woman was called for a mammogram. Indeed, there are many people in the north west who have not yet had the opportunity to have a mammogram because BreastCheck has not been rolled out there. I recall having a robust debate on radio with a member of the Opposition and saying it would be rolled out in our area in 2006. However, I very much regret the fact it has not been rolled out. It would be prudent to have a debate at this point and to ask the Minister for Health and Children when it can be rolled out.
It is appropriate that we are preoccupied with the economy at this time but it is also the time of year when many local authorities begin to prepare their budgets for the coming year. As our electoral base comprises predominantly local authority members, it would be appropriate to debate local government funding on an ongoing basis because it is a very important issue.
Senator Jerry Buttimer: I join with Senator Michael McCarthy in raising the issue of BreastCheck and I call for an urgent debate on it. I have a copy of a letter from BreastCheck which was received by the family of a lady in my area of Bishopstown who died two years ago. It is not good enough that a family suffering the trauma of a death received this letter in the post. We are being very unfair to people. Senator Michael McCarthy is right that we need an urgent debate on this issue. As the Deputy Leader, Senator Boyle, will know, the South Infirmary-Victoria Hospital has been amalgamated with Cork University Hospital. We need an urgent debate on centres of excellence and on how our health service can provide a decent and proper service to the people.
Senator Déirdre de Búrca: I look forward to the debate on the Credit Institutions (Financial Support) Bill 2008 later this evening. As my colleague, Senator Ó Murchú, said yesterday, we have a choice in this regard. We have seen the political response to this issue in the United State in terms of the bail-out proposed there. It would appear that a certain party responded more in a highly populist and political way than in the interests of the US economy. I hope that when we debate this issue later, we keep the interests of the economy, the taxpayer and the people at the heart of the debate.
I raise an issue on which I touched yesterday concerning the protection the Government is offering to six financial institutions. Other financial institutions operate in this country in which Irish people have savings and so on, but these institutions will not be offered the same protection. I reiterate the point I made yesterday that we need to start to look at an EU-wide approach to regulating our financial institutions.
A Belgian company operating in Belgium, France and another EU member state raised the issue of difficulties where it is necessary for a state to intervene and offer protection to an institution or bail it out. If a financial institution operates in a number of member states, it can be very difficult to do that. In the future, we will see financial institutions operating in many member states. When these difficulties with our financial systems arise in the future, we will need a regulator or a regulatory system capable of transcending borders.
While I welcome what the Government is doing at this time, we need to look ahead. I encourage the Minister for Finance and other Ministers, in their discussions in the Council of Ministers, to raise this issue and to be proactive in trying to ensure that an EU-wide system of financial regulation of markets is designed and planned in the coming months.
Senator Fidelma Healy Eames: Overnight serious concerns have been expressed to me about the lack of clarity in regard to the various risks to the taxpayer as a result of the Credit Institutions (Financial Support) Bill 2008. Before we agree to this legislation, we need to ensure it is good and sound. For example, if I deposit my money in Ulster Bank and Senator Cassidy deposits his money in Allied Irish Banks——
Senator Alex White: There is not a bank big enough.
Senator Fidelma Healy Eames: ——he now has a State guarantee but I do not have one.
A Senator: He deposits it in Zurich.
Senator Fidelma Healy Eames: Unintentionally, the Minister for Finance may have exposed banks which are sound——
An Cathaoirleach: The Senator can raise that in the debate later today and she can talk to the Minister directly.
Senator Fidelma Healy Eames: I appreciate that but it is very important we raise these questions in order that Members have time to think about them before the debate. There must be a level playing field.
Farmers have contacted me to say that in the past week, millions of euro have been deposited in the single farm premium in some of these banks which will not have the State guarantee. Is the Government taking responsibility for this? We must have a level playing field. There are questions in regard to breaches of constitutionality and of EU competition law.
Most worrying is the lack of specifics in the legislation. Are we giving too much power to the Minister for Finance? It is like open cheque book season. We are not only selling the family silverware but we may be selling the family home and farm as well. I implore Members to think carefully about amendments. We are all together on this but we need to ensure strong and sound legislation is adopted.
An Cathaoirleach: The points have been well made. There are a number of speakers offering and I would like to accommodate them.
Senator David Norris: I am a little surprised to come back to the House and hear what seem to be echoes of the American Congress debate, which I thought was disgraceful, particularly the behaviour of the Republicans. George Bush was a rotten President and has now shown he cannot even deliver his own maggoty troops and Mr. Mc Cain is a person who has fought for the past 20 years against any regulation in the financial industry. If the Americans put Mr. McCain in as President, they will deserve every financial calamity that occurs and every foreign policy result. This crisis all came about through greed and started with people like Thatcher and Bush.
I have not yet had an opportunity to look at the Bill, but I hope there will be something in it to protect the homes of the people. A number of people here — mine was not the only voice — spoke about the dangers of giving excessive mortgages of 100% or 110% and the danger of negative equity. Now people are caught and there have been repossessions. Some 126 orders were granted in the past year for the repossession of homes by financial institutions and 104 went to the Circuit Court. This must stop. If taxpayers are bailing out the financial institutions, ordinary, decent, working people, who were squeezed by them when they did not give a damn about their customers, must be protected.
I wish to raise one other issue. We have often spent time discussing the Middle East.
An Cathaoirleach: The Senator made a personal remark relating to the President of another country. Those people are elected by the people of the relevant country.
Senator David Norris: There is a question mark about that. President Bush should be impeached and is guilty of war crimes. There are many people in this House who would agree with that. The sooner he is gone the better.
An Cathaoirleach: We are on the Order of Business, not discussing the American President.
Senator David Norris: I know, but I will defend my right to attack Bush in the interests of decency and international law.
An Cathaoirleach: We will take questions to the Leader. The time is almost up.
Senator David Norris: I indicated I have a question about foreign affairs for the Leader. This concerns the Middle East, in particular the situation in Iraq, where Mr. Bush has also stuck his jammy little fingers in to disastrous effect and has installed a puppet regime there.
An Cathaoirleach: Please put a question on the Order of Business.
Senator David Norris: A member of the Iraqi Parliament who visited Israel in order to understand the people so opposed to him has had his immunity lifted. On his previous visit to Israel, his two sons were assassinated in a bomb attack aimed at him. We need a debate on this issue. I would welcome if we could send a protest to the Iraqi Parliament. People need to meet on these sensitive issues to discuss them. The man in question is Mithal Alusi and I heard him on the BBC World Service. The rights of parliamentarians must be maintained in the interest of proper diplomacy.
Senator Liam Twomey: I ask the Leader to ensure that during the debate on the banking issue we are provided with good information on what is happening. Yesterday’s debate on the economy and the debate on shoring up the banks were bereft of good quality information. I ask the Leader to ensure that whichever Minister comes to the House stops treating us like children and imbeciles and gives us proper information about what is going on.
Senator Fidelma Healy Eames: Hear, hear.
Senator Liam Twomey: Ministers must stop telling us we are not clever, smart or intelligent enough to digest the information and to leave it to them — the bright guys — to sort it out. They must provide us with the relevant information to ask questions so that whatever questions are not asked in the Dáil can be asked here. There are two to three days of discussion on this issue, at Government level, with the banks, with the regulator and in these Chambers and we should be able to debate the issues freely.
When the legislation has been sorted out, will the Leader ensure we have a second debate on the question of how we got to this position? We need that debate because of issues regarding the regulator, the banks and the serious concerns with regard to the Government response to the problem. As is well known, the Minister for Finance was talking up the construction industry and the banks up to the 11th hour, before the crisis blew up in his face and the stock market collapsed by 13% on Monday. If we do not have that debate, it will happen on the streets, which will not be good for either Fianna Fáil or its Government partners.
Senator Alan Kelly: It is not my normal habit to tell the House about my bedtime reading. Last night I printed out the debate that took place at the Joint Committee on Finance and the Public Service when the banks attended and thought I was reading something from a different age.
An Cathaoirleach: Has the Senator a question for the Leader?
Senator Alan Kelly: We need to state the facts bluntly. When the people from the banks were before the committee, they were either not telling the truth or were so incompetent they did not see what was coming down the tracks. Whichever it was, it fills me with fear. I ask the Leader to urge the Government to ensure the same individuals are brought before an emergency sitting of the committee, or some other one, to be asked the difficult questions. When they come before committees they must answer the questions honestly. Legislation passing through the House must be based on their truthful responses, but when they were before the House at that time they were not truthful. Therefore, they must be brought before another committee and asked hard questions. There is also serious concern with regard to the role of the regulator. The boards of the banks should also be replaced and the Government must insist on having somebody on them for at least the next two years.
In 1992 a couple on lower executive salaries were able to borrow X amount of money from financial institutions. In 2007 they were able to borrow five times a correlated amount as in 1992. If that is not evidence of banking gone mad or enough to show regulation does not work or demonstrate greed has got into the system, nothing will show us.
On the issue of health, the Teamwork reports have been promised a long time. We heard about them in January, February, April and June, etc., but have not seen them. The HSE and the Minister for Health and Children are implementing the reports without publishing them. Will the Leader find out if they will be published and, if so, when?
Senator Paschal Donohoe: I support the calls for a debate on local authority funding. At the end of last week Dublin City Council was told it would need to cut back dramatically on its social housing programme for the coming year. I represent many of those people and frequently deal with people who have been on waiting lists for between five and ten years. Those people have seen the Government galvanise itself to put in place a guarantee of at least €500 billion, yet the money cannot be found to put in place housing programmes for the people who need them most. This raises serious questions that should be debated and answered in the House. I support the call for debate on the issue.
I wish to make a brief number of points on the debate we will have this evening. There have been a number of calls this morning for the setting up of cross-European institutions to deal with the issue. Before we consider doing that, we should have a discussion on the European institutions we already have, particularly the European Central Bank. There is little doubt that its monetary policy and the decisions it has made on interest rates have contributed to the mess in which we now find ourselves. That should be discussed in national parliaments.
The issue of compensation packages has been mentioned. Stock options have been a major driver of reckless and irresponsible behaviour on the part of banks. We will now find that, because of the decisions made by this Government, the stock options of executives in these companies have gone through the roof. Regardless of the decisions we make or the content of the legislation which comes before us this evening, we have to address that issue.
I will conclude by referring to the way we have discussed the economy. Whenever commentators from the Opposition or the media raised concerns about the way our economy and banking and financial services sector operated, they were called unpatriotic and accused of talking down the economy. Debate on the subject was thereby curtailed or prevented. We are now seeing the consequences of that lack of serious debate.
Senator Fidelma Healy Eames: Hear, hear.
Senator Paschal Donohoe: We need to ensure that debate is entertained and conducted in a respectful manner, as Senator Twomey noted, in order that we do not end up in this mess again.
Senator Shane Ross: I wish to ask the Leader a question about a matter that puzzles me. What is the rush with this legislation? I understood from yesterday’s proceedings that it was being introduced as emergency legislation, presumably because of the danger that a bank might be in trouble or that people on the markets might act on price sensitive information. Our knowledge since yesterday that legislation was forthcoming has lifted stock prices, which may or may not be a positive outcome. Given that today there is no problem for the markets or anywhere else with a delay, what is the rush? Why can we not take more time with this legislation rather than rushing it through tonight? Some of the suggestions made this morning, particularly on this side of the House, were constructive and well-thought out. They cannot be accurately targeted because nobody has had sufficient time to examine the legislation but the more I study it, the less happy I am with it.
My reaction to yesterday’s events was the same as every other Senator on this side of the House, namely, that we have to back a rescue operation of this sort because the alternative would be disastrous. A myth about this legislation already exists in the public arena which suggests that it is merely a guarantee. A reading of the Bill, however, reveals that a guarantee is only one element of its provisions. It makes broad reference to financial support, which it specifically describes as “a loan, a guarantee, an exchange of assets and any other kind of financial accommodation or support.”
An Cathaoirleach: We are not debating that yet.
Senator Shane Ross: This is not a doomsday situation; it is a case of the Government being able at any time to give a loan to a bank that is in trouble. I did not even realise that yesterday. It is important that we are given time to study this Bill before we rush it through. I ask the Leader again why our deliberations have to be finished by midnight. Why can we not at least be given an additional day to consider it?
Senator Donie Cassidy: Senators Fitzgerald, O’Toole, Alex White, Boyle, Coghlan, Bacik, Regan, MacSharry, de Búrca, Healy Eames, Norris, Twomey, Kelly, Donohoe and Ross expressed their views on the legislation we will consider this evening. As Senator Ross correctly noted, the Bill will seek our approval for a two year term to recover from the global economic crisis that faces every country. It is not an indefinite period. The legislation gives confidence to many of the people I know who are creating jobs and providing employment. Over the weekend, these people were very concerned.
I advise Senator Healy Eames that the banks in which she has deposited her money are fully guaranteed because she does not have €100,000 on deposit, just as I do not. Both of us are adequately covered in that regard.
Senator Fidelma Healy Eames: How does the Leader know I do not?
Senator Donie Cassidy: She can be assured that the Government has fully guaranteed her deposits.
Senator Fidelma Healy Eames: I am representing the taxpayer.
An Cathaoirleach: The Leader, without interruption.
Senator Donie Cassidy: We are all taxpayers and we are all compliant.
Senator Fidelma Healy Eames: With respect——
An Cathaoirleach: The Leader, without interruption.
Senator Fidelma Healy Eames: He spoke directly to me and I would like to respond.
An Cathaoirleach: The Leader is replying to questions raised by Senators and if he identifies a Senator by name, that does not mean he is offering a direct reply.
Senator Donie Cassidy: We would all wish there was no need for this legislation but, on behalf of the Government, I express appreciation for the support offered by all sides of the Houses of the Oireachtas in the national interest. We are an example to our country, to Europe and to the world and I hope the rest of the world takes heed of this initiative by Government to assist families who have for generations created employment. This is the template on which the recovery of the global economy can be built.
It is my intention to propose on next Wednesday’s Order of Business that we devote part or most of that day to a debate on banking. I also propose that the Seanad should act as the watchdog for activities pertaining to banks in this country for as long as is required.
In 1992, I worked closely with Senator O’Toole and the former Senator, Dr. Maurice Manning, to address the appalling circumstances in which families of former Members found themselves. One Member who had served for eight and a half months had a good managerial job but found himself on the dole queue. These circumstances would not be acceptable in any other walk of life, so why should they be accepted in the Oireachtas? We are fortunate to have someone with the experience of Senator O’Toole who can assist the Oireachtas in getting fair play for the families we represent. These families do not work 40 hours per week in serving their communities, they work 100 hours or more. In particular, our wives and partners spend 18 hours per day on the telephone on behalf of the people of Ireland. Their commitment is difficult to find in any other industry and I assure the House that our goal will be to bring Senators who served in 1960 to parity with the standards of pay and remuneration of those who will serve in 2010.
Senators McCarthy, MacSharry and Buttimer sought an urgent debate on BreastCheck and the alarming issues they raised. I will endeavour to arrange such a debate for the near future.
Senators MacSharry and Donohoe made a timely call for a debate on local government funding. Given that budget day is approaching, I will discuss the matter with party leaders with a view to finding time for a debate.
Senator Norris called for an urgent debate on the Middle East. I can arrange time for that. Senator Kelly requested that I inquire into the Teamwork report on the HSE. I will make inquiries on the matter this afternoon.
Order of Business agreed to.
Senator Donie Cassidy: I move:
Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael Finneran): On behalf of the Minister for Justice, Equality and Law Reform, I thank the House for making time available to discuss the motion relating to the exercise by the State of our option to take part in the adoption and application of the proposal for a decision of the European Parliament and of the Council amending Council Decision 2001/470/EC establishing a European judicial network in civil and commercial matters. The Minister is conscious of the fact that the deadlines are very tight and, for that reason, the co-operation of the House on today’s discussion is much appreciated. Senators will be aware that, as this is a measure to which the fourth protocol of the Amsterdam treaty applies, we have a three-month period within which to notify the President of the Council of our intention to opt into any discussions from the beginning. That period expires this week.
Members of the House will be familiar with motions of the type under consideration, given that numerous similar motions have come to the House for approval. This reflects the fact that there is a lot of activity in the area of civil law co-operation within the EU forum. On previous occasions, Senators have made very useful observations on the proposals brought before them and, while our time today is limited, I look forward to the comments of those who contribute to the debate on the motion.
The proposed decision was presented as part of a general programme of measures in the field of judicial co-operation in civil matters where those matters have cross-border implications and are seen as necessary for the proper functioning of the Internal Market. It amends a 2001 decision, which we have already opted into, which established a European judicial network geared primarily towards establishing an information system among member states with regard to judicial co-operation in the civil sphere. The amending proposal follows on from a Commission study published in 2006 which suggested that the role of the network needed to be enhanced given the number of Community instruments in the civil justice area which have come into effect since 2001 and which will come into effect in the near future. The proposed amendments are intended to facilitate the network in dealing with an increasing volume of requests for information and co-operation.
Before dealing with the specific elements of the amending proposal, I will speak briefly about the network as it operates at present. Some information about funding will also be given. The network consists of contact points designated by member states, central bodies and authorities who have specific functions under various Community and international instruments to which the member states are parties, and any other judicial or administrative authority with responsibility for judicial co-operation in civil and commercial matters and whose membership is considered useful by the member state to which it belongs. In Ireland, the Courts Service has been designated as the contact point for the purposes of the 2001 decision.
Among the network’s activities is ensuring the effective and practical application of existing Community instruments and the establishment of an information system for the public on civil law co-operation within the EU. The latter activity has resulted in the creation of a website which has been on-line since March 2003. The network meets regularly and the meetings are organised, chaired and serviced by the European Commission. They provide an opportunity for the sharing of experience with regard to the operation of Community instruments in the area of civil law. They have also led to the publication of a number of practice guides intended to assist in the application of these instruments, covering areas such as the taking of evidence and the European enforcement order regulation. Funding is provided by the Civil Justice funding programme, a specific objective of which is to facilitate the operation of the network. Ireland notified its intention to participate in the adoption and application of that programme in 2005, and it was adopted in 2007. It is envisaged that funding of the order of €3 million will be available for the running of the network, including its website, in 2009 and in each year for the duration of the programme, which runs until December 2013.
One of the more significant elements of the amending decision is the proposal to open up the network to the legal professions directly concerned with civil judicial co-operation and directly involved in the administration of justice. It is envisaged that their participation will bring added value to legal practice in the European Union and enable the network to achieve its objectives more effectively. For the purposes of this proposal, “the legal professions concerned” means only those which participate directly in the concrete application of Community and international instruments concerning civil justice in the course of judicial or extra-judicial proceedings. In Ireland, this essentially means barristers and solicitors. In other countries, professions such as notaries and bailiffs are also involved. The proposal does not provide for direct access to the network for individual members of the legal professions. Under its terms, only the professional associations representing the different legal professions in each member state at national level would be invited to become members.
The element of the draft decision concerning effective access to justice for the public reflects the emphasis placed by the Hague programme on improving such access. In a number of Community instruments adopted to date there is provision for measures to be taken to inform the public of their content, and the network is seen as a key player in ensuring such provision.  For example, provisions of this kind are included in the regulations establishing a European order for payment procedure and a European small claims procedure, both of which are due to enter into force within a matter of months. The draft decision contains a new article which specifies that the contact points are to inform the public directly about relevant Community and international instruments. The Commission’s role in the network’s public information system has also been addressed in more concrete terms. The Commission will have responsibility for translating into the official languages of the Community information on the relevant aspects of Community law and procedures, including Community case law, as well as translation of the system’s general pages.
A further element of the proposal is designed to provide additional clarity concerning the role of the contact points. Obviously, this is most relevant where a member state designates more than one contact point. Provision is also made for closer co-operation between the judiciary and the contact point in member states where that state has chosen to appoint a person other than a judge as contact point. The proposal also addresses the relationship between the contact points and the central authorities who have responsibilities under EU and international instruments, and aims to promote the development of exchanges of views and regular contact between these two categories of network member in the member states. It also deals with the expeditious processing of requests for judicial co-operation within the network. A further new element is the idea that the contact points will present a two-yearly report on their activities. In the expeditious processing of requests, the network has already demonstrated that it has the capacity to be more effective in this regard than other, more traditional, co-operation structures.
Other elements of the proposal include the arrangements for the Commission to keep a secure electronic register of exchanges of judicial co-operation between contact points, and to supply the network, on a regular basis, with statistics on requests for judicial co-operation. It is also proposed that the network will be given an additional task so that in the future it can play a key role in informing the courts and authorities, which are responsible for a case, about the content of foreign law, where the law of another member state is applicable to the case in question.
A number of technical amendments to the 2001 decision are proposed, one of which will increase the number of representatives which member states are allowed to send to contact point meetings. This means that where specific issues are to be discussed at meetings, member states will be able to include more experts in their delegations and thus ensure a more informed discussion takes place. It is also proposed that provision be made for the establishment of exchanges and co-operation between the network and other networks that facilitate co-operation between judicial systems or access to justice. Examples of such networks include the Hague Conference on International Private Law, which the Community joined in April 2007, the European Consumer Centres Network, and a Latin American international judicial co-operation network in which Spain and Portugal already participate.
Discussion on the draft decision has only just begun and during the negotiation process changes may be made to reflect the individual concerns and needs of the participating member states. In this context, because of the terms of its Protocol to the Treaty of Amsterdam, Denmark is not participating in the adoption and application of this decision. However, the draft decision will continue to facilitate the representation of Denmark at meetings of the network. The decision also provides that representatives of accession countries and candidate countries may be invited to attend network meetings as observers, as may representatives of countries that are parties to the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
The UK has already given notice of its intention to participate in the adoption and application of this decision. It is the Government’s view that it is important that Ireland responds positively to the tabling of this proposal by exercising the right which we have to opt into discussions at an early date. On behalf of the Minister, I very much hope the House will support the proposal that Ireland opts into the discussions on this decision and I thank Senators for making time available to facilitate our participation in the negotiations on this instrument. Obviously, given our participation in the underlying 2001 decision, it makes sense for us to opt into this amending proposal.
Senator Eugene Regan: I know the Oireachtas wishes to scrutinise EU legislation more seriously. However, this is the most innocent legislation I have ever seen. Ireland has opted into this system of the European judicial network in civil and commercial matters based on the decision of 28 May 2001. I find it rather absurd that we are required to go through this process of opting into a decision which, as the Minister of State pointed out, makes some technical amendments in that decision. That process is rather heavy and reflects the absurd situation in which we find ourselves by having the opt-in opt-out process the Government has chosen to adopt.
I have no difficulty with the proposed decision to make some technical amendments to the original Council decision of 2001 on the European judicial network. The recognition and enforcement of judgments in civil and commercial matters is fundamental to doing business within the European Union. This network facilitates that process, and informs the judiciary and legal professions in different member states of the relevant regulations, laws and judicial decisions and judgments in different member states. There is nothing contentious in this proposal. It allows the Commission to take on the role of translating certain legal instruments and such matters. I have no difficulty with the proposal. However, I believe there are other decisions in this area that warrant debate and we tend to adopt many decisions without debate. This is one that could have been adopted without debate. While we support the decision, I find it curious that having opted into a measure in the area of judicial co-operation in civil matters we are required to go through that laborious process each time when mere technical amendments are made.
Senator Denis O’Donovan: Like Senator Regan, I have no problem in welcoming this proposal. It is good to see a network that is common to all of Europe. Historically in civil, commercial and contract laws we come from a common law background whereas the law in most of Europe is based on the Napoleonic code. I have one question on contact points. Has it been established which contact points will be used here? Is there a central contact point? Will the Courts Service, the Bar Council of Ireland, the Law Society of Ireland and possibly even the Judiciary have individual contact points or will there be a central contact point covering all of them?
I welcome the Minister of State to the House. As far as I am concerned we are pushing an open door on this matter. I concur with my colleague. More often than not these types of issues are brought before us without debate. Some issues that come before both Houses have greater merit for debate than this one, which seems an innocuous proposal. However, one of the reasons the Lisbon treaty referendum was rejected is that there is a general perception on the streets that we are dictated to by Europe and more often than not we do not know what is coming down the track or what is agreed or not agreed. While many directives and proposals come before both Houses that are passed through on the nod and agreed without debate, greater scrutiny of those could take place in the future.
Once my question about contact points is clarified, I will fully support the proposal.
Senator Ivana Bacik: It is nice to witness such a mood of consensus. We are all agreed that this is a measure to be welcomed. Senator Regan and others have asked why this EU measure is up for debate in the House when other measures that are more deserving of debate have been passed through, as Senator O’Donovan has said, more or less on the nod. We should consider how the decision is made as to what EU measures are debated in the House and what measures are simply passed without debate. Having said that, this is clearly an uncontroversial measure, a main aim of which is to facilitate public access to information about court procedures. It is especially important for anyone facing cross-border litigation or anything to do with a transnational dimension.
The website set up under the scheme already is very informative. It provides information, for example, on how to bring a case to court in the 27 member states. There is a general benefit not just for litigants or potential litigants and for practitioners but also for academics in terms of facilitating greater research and increasing our knowledge pool about the legal systems of other member states. We have been somewhat isolated in Ireland as a common law country and it is good for us to have access and information on the systems and procedures that operate in civil code countries.
Ten years ago I participated in a European traditional network research project on rape law across the then 15 member states and looked at different procedures in rape trials. We learned a great deal about how to improve our rape trial processes in Ireland from the victim’s point of view. We learned a great deal from looking at systems about which we knew very little before membership of the EU. I think this sort of judicial network is very beneficial.
However, there are some measures, particularly in the criminal law side, where we would have to be concerned about enhancing EU co-operation to ensure there would not be any encroachment on the due process rights that we have well-established in our criminal system. In some instances, especially in terms of policing co-operation, we would have data protection concerns about the sharing of data across borders but clearly none of those issues arises here. I welcome the motion.
Senator Alex White: Like my colleagues I have no difficulty with the substance of the proposal but I am reflecting on what Senator Regan said. Whereas I share his frustration in respect of this matter being tabled while such a range of other matters are not, I would come to a different conclusion. As we reflect on some of the issues that are still live in respect of what was contained in the proposed Lisbon treaty which was rejected by the Irish people, the extent to which parliaments, including this one, should be involved in a much closer way in scrutinising EU legislation is a matter on which there was not enough debate in the course of that referendum debate.
We cannot afford to take the view, and Senator Regan did not suggest this, that we would prefer that the Government would err on the side of not bringing matters before the Oireachtas. I would prefer if the Government were to err on the side of bringing matters before the Oireachtas. It is then a matter for this House and the other to decide on the extent of priority it wishes to give to discussion and so on. I would prefer if we were to enhance the level of debate on all these measures, even those that are not especially controversial. We can decide ourselves when the measures come to the House whether they are controversial, but they should be brought before the House. That is the spirit in which we will have to look at in the future in the European institutions, if we have a future, and in the context of the importance of enhancing the role of national parliaments. In that context, I welcome the content of the motion and also the fact that it has been brought before the House in order that we can consider it, however briefly.
In regard to content, as others have said, the motion is not controversial. Anything it contains appears to be positive. It expands and deepens the network and makes more information available about it, including the range of bodies which would be a party to it, such as the legal profession and so on. That makes sense.
On the question of the particular opt-in, it is striking that the Minister of State in his contribution pointed out that part of the context for dealing with this issue and the Government taking the view that we ought to opt in is that the UK has decided to do so. That appears repeatedly to be the rationale for our approach to judicial matters. I appreciate it is also a common law jurisdiction. We seem to be incapable of extricating ourselves from any decisions the UK might take in this area. It is a pity in the context of where we are in Europe, with our own institutions and our own system of law and how that has evolved and will continue to evolve, that anyone who reads the Minister of State’s speech would almost be tempted to ask why we are adopting the measure. When one reads through the paragraphs one finds that the UK has already given notice of its intention to participate in the adoption of the measure. That is unfortunate.
On the question of these matters coming to the Oireachtas, one issue on which there will have to be considerable improvement is the extent of the information available to Members prior to such debates. I do not make any particular issue about this measure because it is relatively straightforward and can be considered in a short period. When these matters are tabled, supportive information must be extended to Members in this and the other House in advance of the debates to allow them to consider the issues and make an intelligent and meaningful contribution to the debate. If we are to have any hope of participating properly in a yellow card system in the future or discussing the more serious issues that are likely to come to national parliaments in the event of an element of Lisbon being agreed, we need to gear up our level of information and expertise on many of these matters.
Senator Dan Boyle: It is easy to be jingoistic in terms of a belief in our own policing and judicial system, saying it is better than other judicial systems of policing in that it cannot be improved upon. As an island nation perhaps we are more guilty in this area than others. We are discussing changes in judicial co-operation on civil and commercial matters in the European Union in terms of information and acting on that information. It would be useful, in a wider debate, to discuss where we can and do intermingle with other EU countries, despite the difficulties that exist such as Ireland being a common law jurisdiction and others being statute-based, legal systems which are inquisitorial rather than adversarial. In terms of where Ireland stands, there are ongoing concerns that the more we intermingle and a bigger caucus of European law is formed in this area, the more we lose and the greater the potential threats to civil liberties. I am less convinced of that than I have been in the past.
I was in a German city, Frankfurt (Oder), which is on the border with Poland and a town called Slubice. While Poland has only recently become a member of the EU, both countries are part of the Schengen Agreement, which we are not. The border post that existed on that bridge between the two towns has been dismantled. What I found curious was that police cars were going in both directions from the jurisdictions of different police forces and it seemed utterly normal.
As an island nation we do not have a sense of that and, as yet, we do not have the degree of compatibility that exists with other EU members, especially in the central European landmass. The wider debate we need to have must be informed by matters such as that, especially in the context of the aftermath of the referendum on the Lisbon treaty. Without that sense of informed debate, we will repeatedly fall victim to the type of prejudice and misinformation that has characterised the recent debate in this country.
I agree with the previous speaker that we should seek greater debate and more information on this area. What is being put forward today is interesting in that it is about the shared use of information. If we had greater detail to examine we would ask about the safeguards, the subsequent use of the information and the limited form in which it should be used. What is being proposed, especially in respect of the financial matters and payment orders, is less of an opt-out for people who wish to leave a jurisdiction without living up to their financial and commercial responsibilities. People have been guilty of this in the past in this country.
It is also a useful addition to the Hague process in terms of many legal orders that have emanated from the European Union in recent years and which we are adopting slowly by resolutions in both Houses. On those grounds, I welcome what is proposed and I accept there is a need for wider and more informed debate in these areas. I look forward to our total system of policing and our judicial process being better practised as a result of measures such as this.
Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael Finneran): I thank the Members of the House for their supportive comments regarding the motion. As Senator Regan said, to a great extent it is an innocent proposal that is about having a flow of information between member states and about the whole area of judicial co-operation. That is what is involved. As to why the motion is put forward at this time, we had the 2001 decision and technical amendments to that are now being brought forward. That must be taken into consideration as well.
Senator Denis O’Donovan asked about the contact point in this country, and that is the Courts Service. I thank Senator Bacik for her comments. The value of the network’s website is precisely the kind of practical tool that will be available regarding the flow of information in the civil area. As Senator Boyle said, by and large we are talking about civil and commercial cases and people living up to their payment responsibilities across the EU, whether these concern maintenance or other kinds of payment. This is a practical approach to the matter. Discussion is not complete and there may be variation as it goes on. Ireland is party to the decision already and we will now become party to the amended decision. I welcome the support of the House on the matter.
Question put and agreed to.
Senator Larry Butler: I move: “That Second Stage be taken now.”
Question put and agreed to.
Question proposed: “That the Bill be now read a Second Time.”
Minister of State at the Department of the Environment, Heritage and Local Government (Deputy Michael Finneran): I spent more than 13 years in this House as a Senator and am delighted to return today as Minister of State with responsibility for housing to initiate the passage of this important legislation.
Housing is an issue that affects everyone. In these turbulent days, we are all too familiar with the issues arising in the housing sector both in this country and abroad and are also aware of the human dimension of the steep downturn we are experiencing. This places a spotlight on our public policy and finances. Are we getting value for money from our investment? Are we efficient and effective? Most importantly, are we protecting the more vulnerable sections of our society?
Housing means providing homes for people. This is a basic human necessity and the Government has a responsibility to help those who cannot afford to provide a home for themselves. The priority afforded by the Government to housing was clearly articulated in a number of important strategic documents, including Towards 2016, the National Development Plan 2007-2013 and the Government’s statement on housing policy, Delivering Homes, Sustaining Communities, published in February 2007. We have made progress in implementing the commitments contained in these strategies and increased investment by Government has allowed for expansion and diversification in housing support. It is expected that investment of about €2.5 billion in social and affordable housing in 2008 will meet the needs of 20,000 households.
It is important we have the appropriate legislative framework for planning and delivering housing in a way that can adapt to changing environments and meet the needs of individuals and the community. The Housing (Miscellaneous Provisions) Bill 2008 provides the platform for a more efficient and effective housing service. It gives effect to the programme of housing reform measures outlined in the Delivering Homes, Sustaining Communities policy document.
The current body of legislation on housing dates back more than 40 years and has developed on a piecemeal basis. This Bill will provide greater clarity and transparency to underpin the housing service of the future. This service will not only be more responsive to the household and recognise that its accommodation needs must be addressed in a flexible manner as its needs change over its life cycle, but will also be cognisant of the need to build and maintain sustainable communities. The Bill will establish a modern system of governance for social housing and will provide legislative backing for new and innovative schemes and existing operational mechanisms.
Assessing individual housing needs in a community setting means that there is a critical local dimension to the delivery of housing services. The Bill reflects the Government’s ambition to strengthen local democracy by reinforcing the role of elected members. In this way full account will be taken of national policy while responding to the particular needs of members’ areas. To ensure national policies are reflected in the exercise of statutory functions at local level, powers for the Minister to issue directions and guidance are now provided for in this Bill.
The Bill is set out in four Parts with 43 sections and three Schedules. I will refer in some detail to the main provisions. Part 2 concerns the functions of housing authorities. With the exercise of any function, it is crucial that the structures and administrative tools are in place to guide strategic and operational activities. Part 2 of the Bill outlines, in a transparent manner, the range of functions of housing authorities. The Bill does not alter the basic distribution of housing functions across the different levels of local government reflected in the current legislative code, but it does provide for better planning and integration of services by providing for housing services plans which take a broader strategic perspective at county and city level.
The Bill makes it clear that the key function of housing authorities is to provide a housing service. As section 10 outlines, this service comprises a range of different housing supports, including social housing support, affordable housing and other services with which Members are familiar. Other housing services such as management and maintenance and regeneration are also reflected in the section 10 definition.
Sections 12 and 13 deal with funding issues. Section 10 replaces section 15 of the Housing Act 1988 and lists the various types of support for which grants or subsidies may be provided from the Exchequer. Section 13 deals with resources available to local authorities from sales or clawbacks and provides that these should be placed in a single fund to be used for housing purposes with the prior approval of the Minister.
I refer to housing services plans. Sections 14 to 18 are at the core of strategic planning and operational delivery of housing services. They deal with the making, by local authority members, of housing services plans and with the preparation by managers of housing action programmes to implement such plans. The housing services plans will provide a strategic focus for the planning of housing services, including delivery and ongoing management. The plans build on multi-annual housing action plans that were introduced on an administrative basis in 2004. These proved to be a useful tool for the integrated planning of services and placing them on a statutory footing will provide the necessary framework for engagement with the elected members and a link to work undertaken in preparing housing strategies in the context of development plans.
Under section 14, elected members are obliged to make a housing services plan not later than six months after the current development plan is made and section 15 sets out the matters to be taken into account including the development plan, the demand for social and affordable housing and the need to deliver housing in a way that supports sustainable communities. Section 17 provides for a variation of the plan to be initiated by the manager or the Minister.
Section 18 provides for the making of housing action programmes. The programmes in effect will be the delivery mechanisms for the plans and will be prepared by the manager. It is envisaged that the housing services plans will contain high-level goals and objectives, while precise annual targets for programmes will be set out in the housing actions programmes, which probably will be of a three-year duration. This will allow for appropriate planning of projects and for adjustment to take account of changing needs and resources.
I will turn to social housing support. Chapter 3 of Part 2 of the Bill deals with providing social housing support, which is a crucial component of the broader housing service remit of authorities. It provides the necessary legislative underpinning to the philosophy set out in Towards 2016 and Delivering Homes, Sustaining Communities that housing support should be tailored to individual needs as they evolve over their lifecycle and that the delivery of such support must take account of the broader sustainable communities agenda.
Section 19 updates and replaces section 56(1) of the 1966 Act and gives powers to housing authorities to purchase, build, lease etc. dwellings or sites and enter public private partnerships for the purpose of providing social housing support through a variety of methods. In providing such accommodation, section 19(4) obliges local authorities to have regard to their housing services plans, as well as to ensure that they provide a mixture of house types to meet the needs of a range of different household types and to counteract undue social segregation.
As for addressing social housing needs, an objective and consistent assessment of individual housing needs is the key to providing social housing supports. This is essential for determining a household’s priority relative to the needs of other households and to identify the appropriate supports. Section 20 is the basis for the new assessment of need and provides regulatory powers to set eligibility criteria, classify need and determine the form of this assessment. Section 21 allows for the individual assessments to be summarised in a prescribed form for a variety of purposes, including the making of a housing services plan under section 16. This will replace the current triennial assessment of need provided for in the Housing Act 1988, and will provide for a clearer and more timely picture of the scale and nature of housing need in each local authority area and nationwide.
The next step in the process is to link needs, as assessed in accordance with section 20, to the allocation of resources. Section 22 replaces section 11 of the Housing Act 1988 and provides housing authorities with a new approach to allocating dwellings. The new system is an attempt to improve consistency and transparency in decision making, to provide a better fit between needs and resources and to respond, as far as possible, to the expressed preferences of individual households. Under the new approach, each authority will adopt a new allocation scheme, which will allow for local discretion within the national framework. In this way, it is hoped to strengthen the link between local needs and the subsequent provision of resources and ensure consistency in the way in which applicants for social housing are prioritised.
Chapter 4 deals with the rental accommodation scheme, which is more commonly known as RAS. As Members are aware, RAS was introduced in 2005 and aimed to provide a new housing option for those in receipt of social welfare rent supplement with a long-term housing need. Building on the experience of the scheme to date, sections 23 to 27 of the Bill provide a comprehensive statutory framework for RAS in order that it forms part of an integrated suite of social housing options. Section 24 contains the power for a housing authority to enter into a rental accommodation availability agreement. Under this agreement, the provider makes the accommodation available for a period either for a sitting tenant or for any tenants allocated to the property by the housing authority. There are certain requirements to be met by the provider before entering into an agreement under section 24(2) and the terms and conditions associated with that agreement are set out in section 24(4).
Section 25 deals with the tenancy agreement to be known as a chapter 4 tenancy agreement between the person making the dwelling available and the tenant. It outlines what should be in the agreement and importantly, in section 25(5), sets out additional obligations to those under the Residential Tenancies Act. These include payment of a rent contribution to the housing authority and provisions regarding tenancy termination under the Residential Tenancies Act. Any breaches of these obligations can give rise to terminations. The Bill will, therefore, provide a more developed statutory base for RAS in order that it can continue to evolve and play an important role in broadening the range and choice of social housing options.
I now will turn to the management of social housing. Sections 28 to 34 also form part of the social housing governance regime dealing with local authority responsibilities in respect of housing stock, including tenancy agreements, rent schemes and a new requirement to adopt anti-social behaviour strategies. I wish to draw attention to some of these provisions. Section 31 provides for an authority to make a rent scheme setting out the manner in which it will determine rents taking account of national parameters set out in regulations. It is important to point out that the provisions do not alter the basic concept of differential rent, where rents are income-related with provision for the temporary waiving of rent in cases of financial hardship.
Section 34 requires each housing authority, by reserved function, to adopt an anti-social behaviour strategy for the prevention and reduction of anti-social behaviour in its housing stock. I suspect few Members of this House or of society generally have not experienced, directly or indirectly, some form of anti-social behaviour. Anti-social behaviour disrupts the lives of householders and has the potential to destabilise communities. It is important that we make progress in this regard and local authorities, as landlords of 110,000 dwellings, have a duty to secure and protect the interests of their tenants by abating and preventing such behaviour in their estates. Section 34, therefore, specifies the principal objectives of a strategy, notably the promotion of co-operation with other agencies, including the Garda Síochána. This is crucial as local authorities alone cannot be expected to provide comprehensive solutions to anti-social behaviour issues in their estates. It also outlines the matters that may be dealt with in a strategy and sets out the bodies that must be consulted in drawing up a strategy.
The Bill also amends the definition of anti-social behaviour in the Housing (Miscellaneous Provisions) Act 1997. Part 5 of Schedule 2 effects the amendment to extend the definition to include damage to property and graffiti and significant impairment of the use or enjoyment of a person’s home.
I will turn now to one of the more innovative measures contained in the Bill. Delivering Homes, Sustaining Communities made a commitment to respond to the home ownership aspirations of those who face difficulty in purchasing homes on the open market or through the affordable housing schemes by providing paths to home ownership which are additional to social housing. The incremental purchase scheme, for which provision is made in sections 35 to 40, is one such path.
The scheme involves transferring full title to the new house to the household on the payment to the housing authority or approved body as appropriate of a proportion of the purchase price. The housing authority or approved body places a charge on the property in its favour for the portion of equity not paid for, declining over time until the charge is eliminated. In return, the buyer pays the mortgage and accepts full responsibility for the maintenance of the home.
Eligible households, as defined in section 35, include those assessed as eligible for social housing support by reference to section 20 and, subject to some conditions, existing tenants who wish to transfer to homes made available under the scheme. Section 36 provides that incremental purchase may apply to houses newly built by housing authorities or approved housing bodies and to new houses that are vacant on the coming into force of the Act.
Section 37 provides the power to sell a dwelling under the arrangement by means of a transfer order and sets out the terms and conditions that should apply. Section 38 sets out in detail how the incremental feature of the purchase will operate. It requires the housing authority or approved body to put a charge, by way of a charging order, on a house sold under the scheme. The charging order creates a “charged share” in favour of the housing authority or body, equivalent to the discount granted off the purchase price. This charged share is reduced in equal proportions over the period of the charge. The reduction in the charged share for the first five years of occupancy is not applied until that period has expired. The section also provides for the authority or body to discharge the charge when it expires.
Section 39 deals with the control on resale of incremental purchase dwellings. If the incremental purchaser wishes to resell the house during the charge period, the housing authority or the approved body concerned has the first option on buying it at the proportion of the market value equivalent to the prevailing share of the equity that is not charged.
The resale of an incremental purchase house in the market is subject to the consent of the housing authority or body, which may refuse consent for specified reasons, including anti-social behaviour by the prospective purchaser or in the interest of good estate management. Where an incremental purchaser resells his or her home in the market, he or she must make a payment to the authority or body calculated as the proportion of the market value of the house equivalent to the prevailing charged share.
The incremental purchase scheme offers a number of key benefits. For families, the scheme offers the earliest possible start on the path to home ownership for those willing and able to undertake a house purchase. In addition, giving the buyer responsibility for repair and maintenance of the home helps build the householder’s stake in the property. The scheme is also structured to make it attractive for people to put down long-term roots in the community and commit to an area, thereby contributing to more stable and integrated communities.
For the State, the scheme will provide an opportunity to extract additional value for money from capital expenditure through our social housing investment programme. It will allow capital funding to be recycled quickly, which can then be used to provide additional social housing without the need for additional Exchequer finance. The full details of how the scheme will operate will be spelled out in regulations to be made under the Act in due course. This is a worthwhile and innovative initiative deserving of the support of the House.
The final Part of the Bill deals mainly with the application of clawback arrangements to both the provision of sites for private housing and grants paid for extensions under the adaptation grants for older people and people with a disability. In the latter case, the clawback applies in the event of the extended dwelling being sold within five years of the grant payment, while in the case of what is known as the low-cost sites scheme, the clawback mirrors that already in place under affordable housing schemes.
The Housing (Miscellaneous Provisions) Bill 2008 is an important milestone in the development of housing policy. It provides a more strategic approach to delivery and management through housing services plans and anti-social behaviour strategies. It presents a new, more objective and comprehensive basis for assessing need and allocating housing. It provides a more effective management and control regime covering rents and tenancy arrangements and a more developed statutory basis for the rental accommodation scheme. It is innovative with, for example, the introduction of an incremental purchase scheme aimed at helping those seeking social housing support and existing tenants, in some circumstances, to become home owners. The Bill supports local democracy by conferring a number of new functions on councillors, including the power to make housing services plans; adopt modern and coherent allocation and rent schemes; and put in place specific anti-social behaviour strategies.
Whereas the Bill addresses a wide range of issues, there are other aspects still under development which I hope to bring forward for consideration during the Bill’s passage through the Oireachtas. In particular, I am keen to introduce provisions to allow for the tenant purchase of apartments. We have made significant progress in dealing with the complex legal and policy issues arising but it was not possible to finalise the necessary provisions in time for inclusion in the published Bill. I am determined, however, to continue work to finalise proposals for a viable sales scheme.
This Bill provides additional legislative support to the efforts being made by the Government, local authorities, the voluntary and co-operative housing sector and other actors in the housing area. I am confident it will radically improve the capacity of housing authorities to plan and deliver their services in a coherent, flexible and responsive manner. I commend the Bill to the House.
Senator Paudie Coffey: I welcome the Minister of State to the House and the opportunity to debate this Bill, which is long awaited. It is very timely, especially in the current climate, that we debate housing provision in general for the citizens of this country. It is a wide-ranging Bill that has much to do with public interface and how public authorities interact and communicate with people who have housing needs.
Housing policy as defined by the Department is “to enable every household to have available an affordable dwelling of good quality, suited to its needs, in a good environment and, as far as possible, at the tenure of its choice”. That is a very good definition but it is a pity it is not implemented in many ways through the housing provisions of local authorities and the Department of the Environment, Heritage and Local Government. It holds much rhetoric and spells out very clearly what we should be doing for our citizens. The message many public representatives receive daily is that there are long local authority housing waiting lists and many vacant houses which local authorities have few resources to get back up to accommodation standard. There are many such issues.
Much work is to be done but this Bill sets out, in principle, to address many of the issues I mentioned. Housing provision should amount to the provision of an efficient and fair system of social housing, delivery and service. I do not necessarily like referring to statistics but it is important we have a snapshot of where we are. In 2006, completions for social housing were approximately 93,400 houses. In 2007, that dropped to approximately 78,000 houses. That is a breakdown across all the social housing sector, including the rental accommodation scheme, affordable housing, Part V and the voluntary and co-operative sector. There has been a drop of 15,000, according to my figures, in the provision of houses.
The last official needs assessment carried out by the Department of the Environment, Heritage and Local Government was in 2005, which was three years ago. At that time 43,700 people were identified as having a housing need. These are stark indications. With the current economic climate that figure could be higher now. People who had their own houses with comfortable mortgages at that time may now find themselves having a housing need. If a quick survey were done around the Houses, one would find that many Deputies and Senators have had people at their clinics who are now handing back their keys of private dwellings on which they had mortgages. I have experienced this, and I am sure others have. It is a sad day when that happens. We have to look to the future and to ways in which we can help these people. I am hopeful this Bill will address that matter.
The Bill gives legislative provision to allow a Minister to issue guidelines and directions to local authorities, a measure with which I have no problem. It will achieve consistency in the delivery of services across local authorities. The Minister must have a feel for how he wants to deliver social housing and that is a welcome element of the Bill.
The Bill clarifies the housing supports that local authorities are obliged to deliver in areas such as affordable housing, tenant purchase schemes, loans, grants and homeless services. It also acknowledges the official obligation on local authorities to present housing strategies and action plans which, in the interests of consistency and proper delivery of services across the country, is welcome. It is a systematic way to identify the different challenges each local authority faces. There will be public engagement, with consultation, and strategies and plans are to be adopted by the elected members which, as the Minister said, should enhance their role.
I note that under the Bill, as is the case in many areas relating to the environment, the Minister will now have the power to vary plans adopted by the elected members. I suspect this will cause problems because these are the councillors who are at the coalface daily, dealing with these issues, sitting on the housing strategic policy committees, Traveller accommodation committees, needs assessment committees etc. They may go to the trouble of adopting a plan they, as locally elected representatives with a mandate from their own communities, feel is appropriate, but if the Minister does not like it he can vary it. We in Fine Gael will oppose that measure. I would be interested to hear the views of the Government side on that element of the Bill. It is further evidence of Ministers trying to undermine the autonomy of local democracy. There should be an element of trust in this regard. The councillors are elected, they have the mandate and we must put our trust in them. Many Ministers have come through the local government system and should be well aware of the challenges councillors face. I ask for that element of the Bill to be reviewed.
Local authorities have wide-ranging functions regarding the management, maintenance and refurbishment of their housing stock. Many issues arise in regard to the efficient delivery of that service and function. I referred earlier to the resources available to local authorities. For example, if a number of council houses become available today, the turnaround time for them to be reallocated can be months or even years. It is not acceptable that it should take such a length of time to reallocate houses — ten to 20 houses in some cases — while many people are on the waiting list in urgent need of housing. When I ask various directors of services in housing why this is the case, they simply shrug their shoulders and tell me they do not have the resources or manpower to refurbish those houses and reallocate them. There is something seriously wrong if this is the case and I hope the Bill will address that problem.
The Minister mentioned Part L regulations. The BER standards, the building energy rating requirements for new buildings or any buildings to be let by landlords, have been in force since July 2008. If a survey were carried out today, how many council houses would meet those standards? I suspect very few would reach that standard because of the substandard levels of insulation, doors and windows, facias and sockets in local authority housing stock. I acknowledge that in recent years there have been major improvements in regard to the refurbishment of houses, but whether they are good enough to comply with the BER standards remains to be seen.
I ask local authorities to consider the redevelopment of derelict and vacant sites in towns and villages, something from which they have shied away over the years. They prefer to develop greenfield sites because they are easier to design, to get planning for and there are fewer implications for neighbours. That does not, however, achieve what we want to achieve, namely, the re-establishment of towns and villages. Councils should buy derelict sites and build houses on them to reallocate to the people on their waiting lists. That would be the most cost efficient and cost effective thing to do, and would meet the need to integrate communities. While that is not mentioned in the Bill, it could be facilitated under the service action plans.
The last official assessment of housing needs carried out by the Department was in 2005. It appears this Bill will make it obligatory for local authorities to carry out an assessment of need, which I welcome. Staff training and skill sets are required in local authorities in order that the system delivers a consistent assessment of housing needs across the board. Single people tend to be discriminated against as regards housing because they have no dependants and are seen to be fairly independent. They tend to be far down the waiting list. I would like the needs of these people taken into account when assessing people for housing. Officials and councillors should work together to meet those needs.
This Bill gives a statutory framework to the rental allowance scheme which has been in place for some time. Any initiative that gives people with housing needs the opportunity to own, or rent long term, a house is a positive development. A value for money and policy review of this scheme was promised by the previous Minister of State at the Department of the Environment, Heritage and Local Government with special responsibility for housing and urban renewal, Deputy Batt O’Keeffe, and that was to be completed by the middle of this year. To date that has not happened. The Minister should assess the value for money aspect of the scheme to clearly establish if it can deliver the same accommodation as traditional social housing. There is a concern that local authorities are reneging on their duties to build social housing and are using these schemes to meet the needs of people on their housing lists. I would like such a review to take place as soon as possible.
The home ownership incremental purchase scheme, another avenue for people to get on the housing ladder, must be welcomed. It is an addition to the affordable housing scheme, the shared ownership scheme, the mortgage allowance scheme, the tenant purchase scheme and the subsidised sites scheme, which in the past were successful. It will provide an opportunity for those on incomes too low to qualify for affordable housing to own their own houses. This scheme closely reflects Fine Gael policy in this area.
My colleagues may cover some of the areas I do not have time to deal with, such as the Part V of the Planning and Development Act, under which 5,150 affordable houses were completed between 2002 and 2007. There were 2,482 social houses provided in the same period. With the current climate, it was hoped that the Part V arrangement would deliver more social and affordable houses. As this aspiration will clearly not be realised, it behoves the Departments and local authorities to review their policies and plans to ensure the projected provision under the scheme is maintained, either through direct provision or in other schemes. The abandonment of public-private partnership regeneration projects in Dublin is a typical example of the failure of the current approach. Those affected in the areas in question feel let down and are asking what options are available to them.
Every local authority has experienced its fair share of anti-social behaviour in estates under its responsibility. While this behaviour is concentrated in areas of social deprivation and inner cities, in recent years it has become more prevalent in local authority and private estates in smaller towns and villages. Unfortunately, many of the estates in question were developed by local authorities with the approval of Departments which did not give any consideration to the provision of necessary social and community supports to service these large estates. In many cases, the price we are paying has been the creation of urban ghettos. This is hard evidence of the abject failure of previous housing policies. I hope issues such as these will be addressed in the legislation.
Every local authority is challenged by anti-social behaviour, one of the key community concerns raised on doorsteps during the previous general election campaign. The Fine Gael Party welcomes in principle the provisions which will address how anti-social behaviour will be dealt with by local authorities and the enhanced powers which will be made available to local authorities.
The issue of homelessness and the challenges facing those in such an unfortunate predicament must feature in any debate on housing. I am informed that 5,000 people are homeless at any one time and 2,000 people become homeless every year, the majority of whom live in emergency accommodation. The Way Home homeless strategy announced by the Minister of State promises much in that it proposes to eliminate homelessness by 2010. While it is welcome, the strategy is strong on rhetoric and weak on identifying specific provision of adequate funding and resources to relevant agencies, local authorities and non-governmental organisations to reach this target.
The House should debate the issue of homelessness because in many cases those affected by the problem do not appear on the radar screen of local authorities. Homelessness is not acceptable. A clear, statutory definition of homelessness and the identification of committed resources to reduce the problem are required in the Bill. The role of non-governmental organisations and voluntary housing associations operating in this sector should also be clarified.
I thank the Minister of State for the opportunity to debate the Bill and look forward to further debate as the legislation proceeds through the Houses. I hope my colleagues will address some of the other issues I did not have time to raise.
Senator Martin Brady: I welcome the Minister of State to the House. I value and treasure my long-standing friendship with him and wish him well in his role. I also welcome the opportunity to speak to the Bill.
The Housing (Miscellaneous) Provisions Bill 2008 will improve the delivery of housing services by giving effect to the programme of social housing and the measures outlined in the Delivering Homes, Sustaining Communities policy document published in February 2007. Current legislation on social and affordable housing dates back more than 40 years and has been developed in a piecemeal manner. The Bill will restore order to ad hoc procedures which have evolved over many years.
The Bill is driven by an overarching ambition to promote sustainable communities. Mindful of the role of government in setting down the broad thrust of housing policy, it gives housing authorities the tools and flexibility to implement policy in different ways to meet their specific local circumstances. It also reflects an ambition to strengthen local democracy by reinforcing the role of elected members in determining housing policy at a local level.
The Bill provides for a new incremental purchase scheme which will enable existing social housing tenants and households which qualify for social housing support to become owners of homes newly built by housing authorities and voluntary and co-operative bodies. This is a key provision. When one gives people something for nothing they do not take pride in or look after it. As has been evident in the case of local authority housing in Dublin over many years, people need to have a sense of ownership. In addition, large local authority apartment blocks and housing estates have been badly managed. While we often hear complaints about private landlords, they tend to manage their properties much better than local authorities which have failed in many ways over the years.
The allocation of local authority housing — an issue raised by Senator Coffey — is a major problem in the Dublin North-East constituency. When houses are vacated and boarded up they become a magnet for anti-social behaviour. Break-ins frequently occur and these properties become havens for drug abusers and a nuisance for neighbours. There are 5,000 vacant local authority houses in the State. In one case with which I am familiar it took seven months to renovate a house following its purchase from a private individual.
I am pleased anti-social behaviour is addressed in the Bill because the issue requires significant attention. Anti-social behaviour ranges from drug dealing, selling cars from houses, noisiness at night and general inconveniencing of neighbours. In some cases people are unable to sleep at night. The Bill requires home owners to take full responsibility for maintaining their houses, which is a positive development.
The incremental purchase scheme provides an opportunity for the State to extract additional value for the annual capital investment in the social housing building programme and will allow capital moneys to be quickly recycled to provide additional social housing without the provision of additional Exchequer funding. The Bill also includes important new powers for elected members to adopt strategies for the prevention and reduction of anti-social behaviour in local authority housing stock. An extended definition of the term “anti-social behaviour” covers graffiti and damage to property, which have become major problems in cities and towns. Graffiti appears to be trendy, with graffiti groups running competitions on websites. The Bill includes good, sensible measures which will assist us in achieving our objectives in tackling anti-social behaviour.
The Bill will broaden the choices available to those seeking social housing by establishing a more developed framework for contractual arrangements to secure rental accommodation for social housing. These provisions are based on experience with rental accommodation and involve housing authorities progressively taking responsibility for accommodating people in receipt of social welfare and rental supplement who have had a long-term housing need.
The Government expects to have rehoused more than 16,000 households with long-term housing needs who were previously supported through the rent supplement scheme. Rent supplement is a waste of money. Under the scheme a person rents from a landlord and his or her rent is subsidised by the Health Service Executive. The scheme does not give a person a sense of home ownership as the person concerned is renting somebody else’s house. It is similar to a person hiring a car in that he or she does not look after it as well as if it was his or her own car. It was preferable when people were given their own homes and received support in the form of the rent supplement.
The Bill amends affordable housing legislation to remove any anomaly in existing clawback provisions. They were intended to apply only where affordable homes were resold. A clawback provision provided that one could not sell on a house for a period of five to seven years. I recall that in the Dublin City Council area some people who bought houses under such a scheme resold them a short time later and made a substantial profit.
The Bill will amend the law to enable owners of affordable housing, with the agreement of lenders, to re-finance or top-up their existing mortgage loans without triggering the payment of clawback charge. The Bill supports the creation of a flexible and graduated system of housing supports for those in need of housing. It improves customer choice to meet the changing requirements over a person’s lifetime and strengthens the powers of the housing authorities as social landlords and regulators of social housing.
This Bill is positive, constructive and I believe all its proposals are achievable. The Minister of State, Deputy Finneran, comes from a rural area and is in tune with what is happening on the ground and I am sure he will take on board and examine all the suggestions made. I very much welcome all the provisions of the Bill and commend it to the House.
Senator Ivana Bacik: Like previous speakers, I welcome the Minister of State to the House and express a broad welcome for the Bill and for the aim it expresses, which is to improve housing services and their delivery. I am sure all of us would be in agreement with the need to do that. However, there is an element of missed opportunity about this Bill and a number of areas in which the provisions of it could usefully be strengthened to provide a substantial improvement in the quality of housing services and in their delivery to individuals and families. That is the aspect I want to address in the short time available on this Second Stage debate and I welcome the opportunity to do so.
I am grateful to people from the Make Room initiative, which is run by four of the NGOs providing services to homeless persons, namely, Focus Ireland, Threshold, the Simon Community and the Society of St. Vincent de Paul, for the information supplied. I am also grateful to the Library of the Houses of the Oireachtas which supplied a useful briefing paper on the Bill.
Unfortunately, there is an absence of provision for homelessness in the Bill, an aspect on which Senator Coffey touched. It is a missed opportunity in that this Bill could have provided an opportunity to place the Government’s own homeless action plans on a statutory footing. It presented an opportunity also to provide a better statutory definition of “homelessness”. Many front-line service providers would say there is a difficulty with current definitions of “homelessness” and with what appears to be an under-assessment of the numbers of persons experiencing homelessness. The assessment of the Department of the Environment, Heritage and Local Government conducted in 2005 concluded that there were 3,031 people experiencing homelessness but again that appears to be an under-assessment in that the NGOs providing services have not seen a drop in people using their services. They are of the view that the 2002 figures, which were higher — more than 5,500 — may be a more accurate representation of homelessness.
In addition, there is a difficulty with the definition in that perhaps it does not include those who are in short-term rental accommodation. There is a European-wide definition of “homelessness” that has been suggested that would include persons experiencing inadequate or insecure accommodation such as, for example, victims or survivors of domestic violence. We need to examine that. Although the Bill is very much about improving services, including to persons experiencing homelessness, regrettably there is not included in it a provision for a statutory basis for homeless action plans, or a definition of “homelessness”.
Turning to what is included in the Bill, section 19 deals with social housing provisions, which I welcome. The section deals with the provision of social housing support and gives power to housing authorities to provide, facilitate or manage such provision. There are some important and welcome aspects of the section, in particular subsection (4), which obliges housing authorities to have regard to the need to counteract undue segregation between persons of different social backgrounds when they are providing housing services. It also obliges housing authorities to ensure a mix of dwelling types and classes of tenure. It is important that is done in any urban centre. There is a broad welcome for that. I have a concern, however, about what may be a shift in direction within section 19 towards a more general power to provide social housing support and away from a focus on the actual provision of social housing and the building and construction of new social housing units. Senator Coffey mentioned we had already seen a drop-off in the completion of social housing units prior to these times of economic crises we are now experiencing. It is a real concern that local authorities might be examining other types of support when they should be providing the most secure form of tenure to families and households, that is, the social housing provision itself.
There is a radical proposal which, interestingly, would be facilitated by section 19 because subsection (3) permits housing authorities to purchase dwellings or sites to convert buildings or refurbish dwellings. The figures from the Central Statistics Office on the number of vacant housing units in the State indicate that there is a potential opportunity for local authorities to buy up unsold private units of which, apparently, there are 10,000 across Dublin, and to refurbish them or make them suitable to meet the needs of the thousands of families still on housing waiting lists. The 2005 figures suggest there are 43,000 households still on local authority housing waiting lists and for those people it is important there is still direct social housing provision and not just other forms of support. A concern regarding section 19 is that there appears to be a shift in emphasis away from actual provision of housing and towards different forms of support, some of which may fill short-term needs of households but may not be adequate in the long term.
The rental accommodation scheme, RAS, which other speakers have also addressed, is covered in sections 24 and 25. While RAS was an important initiative, and it is welcome that it is being given this secure statutory footing, I might have a concern that it would be expanded upon and developed as an alternative to the provision of social housing. RAS may not meet the long-term needs of the most vulnerable families and households.
From a reading of a summary of the regulatory impact assessment conducted by the Department of the Environment, Heritage and Local Government in terms of the take-up of RAS in the four years since it was introduced in 2004, I note that the take-up of it has been slow and that the RIA identified barriers to take-up of the scheme. Those barriers would be of great concern because they include the poor quality of private rented accommodation. Any of us who spent time renting in this city or any other areas throughout the State will know that is a real issue. There is serious disparity in conditions in private rented accommodation, not just in old accommodation but some new apartments have been built to very poor standards. It also identified the unwillingness of certain landlords to join RAS and also a shortage of supply of particular types of accommodation at reasonable rent level. It is clear there are difficulties with RAS and it may not be enough to meet the needs of the most vulnerable people. I do not see in this Bill an answer to those difficulties and barriers to the take-up of RAS.
A previous Minister of State at the Department, and current Minister for Education and Science, Deputy Batt O’Keeffe, indicated that a value for money and policy review of RAS was under way and was due for completion in April of this year. Apparently, however, this review has not yet been completed. It would be useful to see what that review reveals in order that we might try to assess how best RAS can be developed.
Section 22 again represents a missed opportunity. The section, which is important and welcome, refers to the allocation schemes of housing authorities in the context of meeting housing needs and requires those authorities to make such schemes and determine criteria and priority for persons applying for housing or the allocation of dwellings. My difficulty is that the section still leaves housing authorities with undue discretion regarding the criteria to be adopted. Anyone with experience of campaigning and knocking on people’s doors will be aware that the criteria applied by local authorities in determining housing need and in allocating housing are a real concern for many individuals. In circumstances where inconsistencies exist and where different criteria are used, there are real concerns with regard to selectivity and unfairness.
The procedure for allocating housing in Northern Ireland was changed as a result of concerns in respect of there being too much selectivity. The experience in that jurisdiction and across different local authorities in this country shows the need for a single allocation scheme based on universal, objectively assessed criteria for allocating housing.
An issue also arises regarding the method used to collect data on housing need. At present, local authorities collect and collate such data separately. The Garda used to gather data relating to crime but in recent years it was recognised that it would be much more appropriate if the Central Statistics Office, CSO, became the agency responsible for doing so. The latter has been done and represents a huge improvement for people who work in the area of criminal justice because they can be more confident about the figures provided. In that context, there is an argument for using the CSO rather than local authorities to gather data relating to housing need, particularly because there is too much room for discrepancy and difference among the criteria used. It is possible that discriminatory criteria are being applied and different methods of selection used. This leads to perceptions of, if not actual, unfairness in respect of housing allocation.
The Bill does not improve on the current position and the inconsistencies attaching thereto. It is welcome that housing authorities will be required to make allocation schemes. However, the legislation is not sufficiently prescriptive regarding the criteria that should apply in the context of those schemes. There is still a need for universal criteria to be applied.
Previous speakers referred to anti-social behaviour, which is the subject of an important provision contained in section 34. As a criminal law practitioner, I am somewhat alarmed by this section. The criminal law provisions relating to anti-social behaviour orders, ASBOs, were introduced with much fanfare by a previous Minister for Justice, Equality and Law Reform and have proved to be ineffectual in practice in the context of addressing the real problems and genuine traumas caused by anti-social behaviour to individuals in different communities.  We must be wary of how we might best legislate in order to deal with such behaviour. This is an extremely difficult matter for housing authorities.
I welcome the requirement in section 34 whereby local authorities must adopt schemes as to how anti-social behaviour will be dealt with. It is helpful that criteria relating to how such behaviour will be tackled will be set down. I would like greater emphasis on early intervention and prevention to ensure that matters do not come to a head in circumstances where eviction is ultimately required. While local authorities should have effective powers to allow them to deal with anti-social behaviour, a difficulty arises because eviction means that the problem is merely being passed on and that innocent people can be hurt if an entire family is evicted as a result of the behaviour of one member. I look forward to reviewing this provision in more detail on Committee Stage.
As already stated, there is an element of missed opportunity about the Bill. However, that is not to take away from the welcome improvements it will deliver. As we debate the legislation, it would be nice to think that amendments which would help to improve the delivery of services to people with housing needs might be accepted. I would welcome it if amendments that provide for a rights-based definition of homelessness were taken on board. Such amendments could be based on the broader criteria adopted by different voluntary agencies across Europe.
I would also welcome further clarification regarding the rights and responsibilities of landlords and tenants. There is, for example, a suggestion that more power might be given to the Private Residential Tenancies Board, which oversees the activities of landlords. Weaknesses relating to the board have been identified. Addressing these might perhaps be another day’s work but provisions could be included in the Bill in order to strengthen the board’s powers. The issues to which I referred earlier, particularly the universal selection criteria, could be dealt with more adequately in the Bill.
There has been much discussion of regulation, particularly in the context of the financial markets. Equally, however, there is a need to discuss such regulation as it relates to housing services. The Bill should contain provisions regarding the regulation not only of State providers — the local authorities — but also of the voluntary agencies which provide housing services. I referred earlier to a universal set of criteria for the allocation of housing and this could also apply to agencies such as the Simon Community which are providing housing on a voluntary basis. The agencies are in favour of the use of such criteria. There can be no argument that the consistency of services would be improved and that matters would be much fairer if a single set of criteria that would — regardless of whether a person is seeking housing in Dublin or Dingle — apply across the board were introduced.
I welcome the Bill and I ask the Minister of State to consider the points I and my colleagues have raised. I look forward to the debate on Committee Stage.
Senator Dan Boyle: I welcome the Bill, which will add significantly to existing legislation relating to housing. It points to how such legislation might be further improved. I do not believe the Bill is meant to be comprehensive in any way. It adds to existing legislative provision but there is no doubt that much needs to be added to it by way of amendment in order to improve it. The debates on the Bill in this and the Lower House will assist in that regard.
Several NGOs have referred in positive terms to the general thrust of the Bill and intend to make concrete proposals in respect of how it might be improved. I hope their suggestions will be looked on favourably.
There is inconsistency regarding the way in which housing, particularly social housing, is allocated. Much of this has arisen as a result of the development of different practices among the various local authorities. Senator Bacik referred to the differences in housing application lists between one local authority and another. It is obvious that some authorities employ good practices while others do not. The local authority of which I had the privilege to be a member for 11 years — Cork City Council — did not deal with this matter in the most open and honest of ways. There is a need for a dramatic improvement regarding the way in which the council operates its housing list. The council discriminates most particularly against single people — most markedly against single men — and different waiting times apply in respect of particular areas of the city where people might request to be housed. This leads to an unbalanced social approach to housing allocation.
Those who work within the housing department of Cork City Council do so with honest intent and are continually trying to square the circle. Their jobs would be made immeasurably easier if the legislation directed — perhaps ministerial regulations could also be made in this regard — that there be a consistent, nationally-based system of housing allocation. What works for people in Dublin city or County Waterford does not appear to work for those in Cork city. We should not be prepared to stand over the different approaches taken to the allocation of social housing.
Part of the inconsistency to which I referred earlier relates to how various State support mechanisms have been used. For example, the RAS payment — this also applies in respect of the various forms of rent allowances and supplements that existed in the past — has been made despite private rented companies not being listed with the Private Residential Tenancies Board. That type of inconsistent approach has led to people being given State support for housing of a poor standard. It is a double standard which will eventually be worked out of the system but the fact it has been allowed at all is a black mark against our national policy.
The role of private rented housing, which in Irish terms is still low compared to other European countries, should be about more than putting a roof over people’s heads and should be about having the highest quality housing. As someone representing the Green Party, it is fair to say that our private rented stock is the poorest of all housing stock in terms of heat efficiency and appropriate environmental standards. There is a role for the Government in regulating for those standards and in providing appropriate supports where necessary.
We are failing to reach our potential in developing voluntary housing, although there have been improvements in funding and in Government and local government interaction. Voluntary housing still comprises only a very small proportion of our total housing stock. I had the privilege of working with a housing body for a number of years, namely, Cork Community Housing Co-operative in Cork city which developed a very good housing project in Wellington Square-Magazine Road.
As a public representative, I had the privilege of accompanying the Minister for the Environment, Heritage and Local Government to a recent opening of a very innovative project at Skiddy’s Alms House. That is a locally based voluntary housing organisation but in recent years, we have seen the development of Irish arms of organisations such as Clúid which is the Irish arm of the St. Pancras Housing Association from the United Kingdom. These groups, along with groups such as Focus Ireland and the Simon Community, are developing valuable social housing approaches on a medium-term and long-term basis which local authorities are not structured to deliver. We need a support mechanism which uses that potential more than has been the case in the past.
Focus Ireland, the Simon Community, the Society of St. Vincent de Paul and another organisation the name of which I cannot recall and which will give out to me make up the Make Room campaign.
Senator Ivana Bacik: Threshold.
Senator Dan Boyle: Threshold, of course.
Senator Jerry Buttimer: It is a good job the Senator is not going for the Dáil again.
Senator Dan Boyle: Threshold is very active in Cork and in other parts of the country. The Make Room campaign tries to place a particular focus on homelessness. This Bill does not refer to homelessness but it should do so. I hope amendments along those lines will be favourably received.
Senator Ivana Bacik: Is that Government policy?
An Cathaoirleach: Senator Boyle, without interruption.
Senator Jerry Buttimer: Senator Dan Boyle is changing the Bill already.
An Cathaoirleach: The Senators will have an opportunity to speak.
Senator Dan Boyle: The Bill will be changed in several ways, believe me.
Senator Jerry Buttimer: Somebody has got to the Senator.
Senator Dan Boyle: That is the nature of the legislative process and that is why we are having this debate. Irish legislation is already well advanced in having a legal definition of homelessness. That does not exist in many other jurisdictions. When examining legislation of this type, we need to ask whether that definition is broad and effective enough and whether this is an appropriate place to deal with the issue. I believe it is.
Particular questions need to be asked about homelessness. It is regrettable that there is a division between the local government element of the Department of the Environment, Heritage and Local Government and the Department of Health and Children on how we should tackle homelessness. The Minister of State recently launched an excellent homelessness strategy. There is a challenge to dedicate particular resources to ensure that strategy is effective.
Day-to-day funding for homelessness is provided by the HSE. Last year the HSE was given a block grant by the Government and asked to spend a particular amount on homelessness but it chose to ignore that advice and spent it in different areas. While that situation prevails, we must ask whether there is a better funding mechanism, whether that funding could be ring-fenced and whether there is a need for a separate agency. There is a homelessness initiative in Dublin but we must ask whether it can be given a nationwide focus because there are other large urban centres which suffer similar problems.
The question of anti-social behaviour is addressed to some extent. It is a development of existing law. The central question remains. If an individual or a family is regarded as anti-social, there is still a problem in terms of what can happen if that individual or family is a tenant of a local authority or even a voluntary housing authority. Is one moving the problem from one place to another? Perhaps it cannot be addressed in legislation such as this but there is a need for intervention and direct supports to deal with the problem at source because otherwise one is simply moving the problem.
The Minister for the Environment, Heritage and Local Government is committed to the right to buy. He has met several groups involved in this thorny and seemingly intractable issue since difficulties arose originally in Dublin and subsequently in other urban centres about the right of local authority tenants to purchase properties. He has given a commitment to address that issue by way of amendment as this legislation progresses through both Houses. I look forward to seeing the nature of that amendment because it will add to this Bill. For another housing Bill to progress through the Oireachtas without that issue being tackled would be to neglect the large number of people involved.
Senator Jerry Buttimer: Where is that in the Bill?
Senator Dan Boyle: It is not in the Bill because it is still subject to legal advice from the Attorney General. The Minister will explain why when the Bill goes through both Houses but it remains a commitment of his and I put it on the record as such.
Senator Jerry Buttimer: Aspirations again.
Senator Dan Boyle: On those grounds, I welcome the Bill.
An Cathaoirleach: I call Senator Prendergast, or Senator Hannigan. I am sorry.
Senator Nicky McFadden: He is not blonde.
Senator Dominic Hannigan: I apologise for the absence of Senator Prendergast. I am sure the Cathaoirleach would prefer to listen to her but he must listen to me today.
Senator Jerry Buttimer: We are delighted to have Senator Hannigan.
Senator Dominic Hannigan: I thank Senator Buttimer.
I welcome the Minister of State and this Bill which is important legislation that can go a long way towards helping people in need of housing. The legislation deals with some principal themes, including anti-social behaviour, the rental accommodation scheme and the incremental purchase scheme. It contains many provisions, including how a housing service is defined, housing service plans, needs assessment, allocation schemes and anti-social strategies. I signal now that we will table some amendments on Committee Stage but will do so in a positive manner. We hope they will be taken on board to try to improve the legislation and I hope my comments are helpful in that respect.
I welcome the contents of the housing service plan, in particular those sections dealing with social segregation and how we need to ensure that people from different backgrounds are catered for within the plan. It is good to see that the Bill calls for a mix of dwelling types to ensure there is a sufficient supply of housing for those wanting it.
Senator Dan Boyle mentioned the absence of a reference to homelessness in the Bill and said that he hopes to see that corrected by way of amendment on Committee Stage. I was glad to hear that because it is clear that there is a real problem with single males and homelessness. There is also a dearth of one-bedroom apartments in local authority provided housing. We need to ensure this is addressed through the housing plan.
I am also glad to see the housing service plan will be produced within six months of the county development plan, which is eminently sensible. However, I ask that the legislation be tightened as regards consultation. Section 16 calls for the housing authority to send a copy of the draft plan to various agencies and authorities. That needs to be stronger and we need to tighten the wording to ensure there is more consultation than simply sending something, waiting to get comments back and then responding to them. I would like local authorities to work much more closely with the relevant agencies.
The housing action programme is very welcome, but who is responsible for its delivery? Is it the county manager, the Minister for the Environment, Heritage and Local Government or the Minister for Finance? A programme is not worth a bucket of rainwater unless it is fully costed and funded. It is unfair on councillors, housing officials and people on the housing list to be told a programme of works is coming down the line only for the funding to disappear. Can I have clarity on who is responsible for ensuring the funding is in place?
The most recent assessment of homelessness shows there are more than 3,000 homeless people in Ireland and more than 43,000 households on local authority waiting lists. I am aware of the impact of this in my area. In Meath there are in excess of 2,000 people on the waiting lists and I regularly get telephone calls from people throughout the county who have been waiting years for housing. Some of them are in housing that is inadequate or needs refurbishment, but the council does not have the money to deal with the situation. It is clear, therefore, that we need a costed and fully funded programme of works.
I would like more information with regard to assessment of needs. Section 20(1) refers to a household as “2 or more persons who, in the opinion of the housing authority concerned, have a reasonable requirement to live together”. However, section 20(4)(a) mentions “a household comprising one person”. What is a household? Is it one person or two or more? Can the Minister of State also explain “reasonable requirement to live together”? I suggest one person’s definition of a reasonable requirement to live together would be very different from another’s. We need to provide a firmer definition here.
The Bill should consider also what constitutes acceptable housing. I know of an estate in County Meath, Alverno Heights, where little work has been done by way of refurbishment in more than 30 years. The people there have been promised year after year that refurbishment works will be carried out, but the Government is dragging its feet with regard to expenditure. Senator Brady, who has significant experience in these matters, asked whether it is the management of local authorities that is responsible for some estates being run down. It is probably because they do not get the funding from the Department to ensure these older estates can be refurbished. Will the Minister of State explain what he understands by social housing support? Does he consider renting a house from the private sector to be social housing support?
The Minister of State mentioned the relevance of Towards 2016. That document states the Department will provide 60,000 households between 2006 and 2009. Current output levels show that at 25,000, we are far short of that, more than 40% short. The result is we have a significant number of households in need of housing because of the failure of the Government to implement its policies contained within Towards 2016.
There is a way around this. There are 10,000 flats or apartments available which gives scope for an imaginative solution. The Department could work with the housing agencies to take those apartments off the market and kill two birds with one stone. First, it would reduce housing supply and kick-start the property market and also reduce housing lists by up to 10,000 households. Perhaps this is something the Minister of State should consider.
The Bill also refers to anti-social behaviour. It is a good idea to introduce additional legislation in this area. Some councils have adopted anti-social behaviour strategies. I spoke to the anti-social behaviour officer in County Meath yesterday. Meath took on board best practice worldwide and introduced a strategy a number of years ago and by being proactive in that respect, it has managed to make some inroads into anti-social behaviour. The Minister of State was correct in saying that anti-social behaviour in estates disrupts the lives of householders and has the potential to destabilise communities. We have all seen at first hand how people are harassed and intimidated in their estates and, sometimes, their homes. A nationwide anti-social behaviour strategy is timely and, it is to be hoped, helpful. What plans are there for an appeals process for people who are served with an anti-social behaviour order? It is only fair we should have an independent appeals process to provide transparency. Will the Minister of State consider that?
The Labour Party may table some amendments relating to incremental purchase arrangements. I have some questions regarding how easy it would be for a single person who started off buying a one-bedroom apartment but then started a family with a partner to move off the scheme and sell the apartment and buy another. What kind of clawback would be involved? Perhaps this will be clarified later. We welcome the Bill in principle as it has positive proposals. However, we will table some amendments in a spirit of improving the legislation.
Senator Larry Butler: I welcome the Minister of State to the House and congratulate him on how quickly he has moved since he took up the position. His website information on social and affordable housing has been very helpful.
People deserve sustainable communities and it is important each community can sustain itself. This legislation will assist in delivering sustainable communities. I agree it is important we find local solutions to fulfil local needs. The Bill will restore order to procedure that has evolved over years. The new housing policy gives the authorities the tools and flexibility to implement policy in different ways to meet local circumstances. There is a need to strengthen local democracy by giving new powers and roles to elected members in determining housing policies.
It is likely that repossessions and evictions will become more prevalent. The Bill should include a provision that banks and building societies should contact local authorities before any legal proceedings for repossession or eviction take place. In light of our assistance to the banking fraternity, the Bill provides a good opportunity to do this. Houses from which people might be evicted could be rented back to householders or local councils might be able to help with finance.
The Minister of State indicated the incremental purchase scheme provides a positive opportunity for the State to exact additional value from the annual capital investment in the social house building programme as that will allow capital moneys to be recycled quickly and provide additional and social housing without extra Exchequer funding.
The Bill provides new powers for elected members to adopt strategies for the prevention and reduction of anti-social behaviour in local authority areas. This has been a bone of contention. Genuine, ordinary, decent people who try to live their lives face interference from people through noise and intimidation. We need strong legislation to deal with this issue which housing authorities should build into their housing agreements.
New powers will be provided for elected members to develop rental schemes and set out policies.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
Senator Larry Butler: Elected members will have new powers to devise rent schemes that set out policy for the determination of rents by managers, as well as updated powers for housing authorities to charge income related rents for accommodation and rent contributions in the case of the rental accommodation scheme, RAS.
Local authority tenancy agreements will include conditions specifically prohibiting anti-social behaviour. It is important we deal with anti-social behaviour because it destroys estates. In some cases, a handful of people can upset entire neighbourhoods. Irrespective of whether such practices take place in private rented accommodation or local authority housing, they are not acceptable.
The Bill will broaden the choices available to those seeking social housing by establishing a more developed framework for contractual arrangements to secure rented accommodation for social housing. These provisions are based on the experience of the rental accommodation scheme which involves housing authorities progressively taking responsibility for accommodating people in receipt of social welfare rent supplements. It is not acceptable for landlords to refuse rent supplement. It is discriminatory and should not be allowed. By the end of 2008, it is expected that more than 16,000 households which would otherwise be paying rent will be rehoused through RAS and other forms of social housing.
The Bill supports the creation of a flexible system of housing supports for those in need, improves customer choice to meet changing requirements over a person’s lifetime and strengthens the powers of housing authorities as social landlords and regulators of social housing to deliver better quality housing responses in a more strategic way by focusing on the building of sustainable communities. The most important provision in this Bill is its commitment to sustainable communities.
Local authorities have been some of the worst landlords in the country. While the private sector also includes bad landlords, during my time as a councillor I visited accommodation prior to it being occupied. It is disgraceful for a local authority to give a house in bad condition to a young couple or a mother with two children and expect them to live in it. This Bill should prevent this from happening because a house will be properly renovated before being occupied. Equally, the tenant should be expected to return the house in a good condition to the local authority.
The Bill will provide updated powers for housing authorities to assess a household’s need and eligibility for local authority housing, rental accommodation such as RAS and voluntary and co-operative housing provided with Exchequer funding. I welcome these changes and look forward to working with locally elected members to provide a better housing system for all who need it.
Senator Jerry Buttimer: Cuirim fáilte roimh an Aire Stáit sa Roinn Comhshaoil, Oidhreachta agus Rialtas Áitiúil, Deputy Michael Kitt. Housing, whether private, social or affordable, affects people. We are rightly debating this Bill and putting the Government’s policy on housing under the spotlight. Some of the contributions from Members on the Government side would have one believe that the Government has no role to play in the provision of social and affordable housing or the support of local authorities. What sort of lives are those Members living?
It is not comparing like with like to claim that some local authorities are worse than private landlords. No local authority can be compared with private landlords whom we have allowed to get away with absolute murder. They can charge what they want, lease housing in whatever condition they like and treat tenants appallingly. We need to tackle the landlords who pursue these practices rather than cosy up to them.
I concur with what the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Finneran, said about protecting the vulnerable but, unfortunately, his Government has failed to meet its obligations in that regard. The increase in the number of people waiting for local authority housing is unacceptable. We have just come out of an economic boom but in every local authority the waiting list for social and affordable housing has lengthened. To make matters worse, we are now encountering repossessions and cases of young married couples who cannot afford to buy houses. A couple consisting of a teacher and a nurse, whose combined salary would once have been considered very large, now qualify for affordable housing. Are the Senators opposite telling us this is what we aspire to? I certainly hope not, but that is what we are hearing. Housing or shelter is a human right. It is not just a necessity.
There is no mention of homelessness in the Bill. What does that tell the people of Ireland who are homeless or struggling to be housed and those working with the homeless? Why is there no mention of homelessness? Is it seen by Government as a housing matter or a health and social affairs matter? Under this regime, it falls between two stools. We have had rows between the Department of the Environment, Heritage and Local Government and the HSE. Let us make it happen. Senator Boyle, in his contribution this morning, made reference to the fact that there would be amendments to the Bill. Why was this not included? We need to make the issue of homelessness a central aspect of the Bill. Let us change the definition of homelessness and broaden its scope. It is more than people sleeping rough. I have made this point in the House on numerous occasions. I challenge the Members opposite to walk from the front gate at Kildare Street, down Dawson Street, past Grafton Street, down towards O’Connell Bridge and onto O’Connell Street any night of the week. They will see a growing number of young, middle-aged and elderly people living on the streets.
Let us consider the issue of homelessness in the context of insecure accommodation and people living in squalor. I disagree with Senator Butler as there are landlords today who are abdicating their responsibility in terms of providing proper accommodation to their tenants. I cannot remember who made a comment in this regard this morning, but the largest group of people at risk in our society are single males, especially in terms of housing. We have done nothing to look after them. They must be a priority because for a strategy to work, it must look after the most vulnerable in our society. More and more single males are coming to us in our clinics and saying they are unable to find housing or buy houses of their own and they are being cast to one side. That must change. I hope a homelessness strategy will be incorporated into the Bill. In a time of recession, rather than cutting back on housing services, we should be increasing supports and budgets for local authorities and organisations such as the Simon Community and Threshold, which are doing such valuable work. This is not an unreasonable request. The funding should be index-linked so that these organisations can be provided for financially.
I could not believe my ears this morning when I listened to Senator Boyle speaking about the right to buy council flats. As we know, many people have been trying for years to buy their local authority flats. The Bill does not address this issue. There are people in my own city of Cork who have made provision to purchase their apartments or flats from the local authority and have been prevented from doing so. A commitment was made by Government nearly 16 years ago that this would be dealt with in legislation. Where is this measure? It is not here. It is not in the Bills digest, the excellent publication provided by the Bills Office. Why is that? The Bills digest states: “The proposed incremental purchase scheme does not apply to the sale of new flats or apartments.” I would like to know why. There was a belief that it would be included in the Bill. We are letting down the people who refuse to take other houses from the county councils, who are staying where they are and want to buy. How long will it take the Minister, Deputy Gormley, to say what he intends to do in this regard?
The Minister asks for local authority housing plans to come back to him. Why should the local authority have to submit its housing plans to the Minister for rubber-stamping? Local authorities differ in each area, as the Minister knows. Their needs differ and a different approach is required depending on where one is. I have never seen a Minister absorb so much of Fianna Fáil as Deputy Gormley has done. He even thinks like Fianna Fáil now. He wants to take power from local government and councils.
Senator John Ellis: The Senator might as well come over here.
Senator Jerry Buttimer: If we are talking about delivery by local government and enhancing its role, surely the best group of people to do this are the active public representatives on the councils. Why do we have to send things back to the Minister for rubber-stamping? We are giving the Minister more powers.
We need to provide resources and enhance the powers of local authorities to deal with anti-social behaviour. I welcome the provision in the Bill for dealing with this issue. If it is to be serious, we need to provide the resources. People need to have their voices heard. Various anti-social behaviour orders and so on have been introduced. Councils have brought tenants to court and have brought prosecutions against them. However, unless we give people power through estate management we are going nowhere.
There has been systematic neglect of local authority estates in many parts of the country which is due to local authorities’ being denuded of power and finance by central government. Last night on the north side of Cork city there was a meeting of the policing forum attended by 400 people. People who attended had an opportunity to speak and they wanted their voices to be heard. Funding is important. I will return to the point I made earlier, namely, the Government should not take resources from local authorities in the area of housing, but rather enhance them and give them the supports they require. It should give people the opportunity to have their voices heard.
The rent allowance scheme is a good scheme which we should enhance and promote. Senator Butler made a comment about rented accommodation. We must consider the different types of rented accommodation and landlords. I emphasise that not all landlords are bad; many are good, decent landlords who look after their tenants well. However, there are some bogus landlords and some who are unwilling to participate in the rent allowance scheme. We have let landlords run amok. This must stop. The idea that we can let people stay in any old house must change. Senator Butler made reference to local authorities providing houses which are in bad condition. Why does it take an inordinate amount of time for a council house to be refurbished and given to other tenants? I have yet to get an answer in this regard, although I have spoken to the director of services and to housing officials. Is it purely lack of resources? Is it bad strategic management? Is it bad planning? Is it because the house is in such bad condition? I do not think so. It comes back to the central issue of funding. We have squandered the boom. We have looked after the fat cats who are great friends of Fianna Fáil and are eating at the master’s table. We have increasing numbers of middle-income people queuing up for affordable housing when ten years ago they were able to buy their own houses. I am concerned when I hear the Senators opposite blaming different factors.
Housing is a right for everyone and the Government should not take it away from people. I am disappointed that the homelessness strategy does not form part of the Bill because it would be a perfect vehicle to drive it on. I look forward to the amendments. We, on this side of the House, will certainly table amendments on the right to buy council flats. I will also look at the amendments from the other House regarding provisions for the homeless.
I hope the anti-social behaviour provisions will be effectively implemented. It is time to take out tenants that cause distress and that are involved in evil and bad behaviour. This poster boy type behaviour has no place in our estates. If we are serious about building sustainable communities, let us consider the planning regime and how we have built our estates and learn from the mistakes made.
Senator John Ellis: The Bill gives us an opportunity to consider local authority housing, social housing and all the types of housing other than private housing. However, on private housing, we all know that some people are now finding themselves in serious difficulty with regard to mortgages. There might be a case to be made to allow some of these mortgages come within the ambit of local authority or social housing parameters. This might allow people stay in their homes rather than allow the building societies or banks repossess them and sell them on thereby landing those people on the local authority lists.
There has been enormous progress with housing in recent years. However with progress comes problems. The biggest problem is anti-social behaviour in some of our housing estates. It is sad to think that people can make life hell for their neighbours without being accountable. In a private estate anti-social behaviour will not be tolerated too long. However, it has become a problem on local authority housing estates. It has even become a problem in smaller estates in small towns. We need to consider ways to deal with people involved in anti-social behaviour. If we take them to court we know what will happen — they will be reprimanded by the judge, walk out the door and get up to the same anti-social behaviour within weeks.
I do not know what measures we could take to frighten people involved in anti-social behaviour. We do not have the right nor would it be appropriate to throw people on the side of the road. However, in some cases the way those people have reacted to their neighbours might warrant something as serious as that. We need to ascertain what we can do. The Bill goes some way in trying to strengthen the hands of local authorities regarding anti-social behaviour. However, anti-social behaviour has various effects. Older people sometimes feel very threatened if they live in OPDs on council estates and they regularly attend our clinics to tell us they feel intimidated. On the other hand older people should not be ghettoised and put into areas with only other older people. We need to work to get the right balance.
The size of housing estates should be considered, as should the mix of people living in them. Certain housing estates in towns have been turned into ghettoes by the local authority because of the tenants they put into them. In brand new estates officially opened by a Minister everybody seems quite happy when the tenants go into the new houses. However, if one were to look at the lawns three years later one would find 20% of them in a mess, 20% of them reasonably maintained and the remaining 60% maintained to a first-class standard. It is wrong that people should be allowed to abuse public housing. While the Bill refers to maintenance, it should be mandatory for the local authority to build a maintenance cost into the tenancy agreements, which should be collected as part of the rent. Those who maintain their houses to a proper standard should qualify for a refund of that maintenance charge.
It is terrible that a person’s house can be destroyed by the people who live next door. If one person maintains his or her house to the highest standard it can be very disheartening if the house next door is not maintained. We are all aware of houses that have been handed over by the local authority in first-class condition — brand new in some cases — fully decorated and fully fitted out with the assistance of the State at some level and some 12 or 18 months later the doors are hanging loose having been kicked in and there is graffiti on the walls. Something needs to be done to prevent such social misbehaviour in public housing. Anything the Minister of State can do to add to the penalties and incentives would be welcomed by people in local authority houses. I could go on about anti-social behaviour forever.
We should give considerable credit to the voluntary housing groups providing housing at a reasonable cost for people in need. We have all seen the voluntary housing sector develop and it has done a good job. However, how much further will the Government be able to go in subsidising the voluntary housing sector? It is so highly subsidised at the moment that it will not be possible to continue the same level of subsidisation in future. We need to be objective in this. It has done tremendous work in places where it has provided sheltered and other housing where the local authority was not able to do so. Senators on all sides of the House have spoken about the problems local authorities have when tenants move out. There seems to be a continual problem with regard to the delay from the time a tenant moves out to when a new tenant moves in. If a private landlord was involved the beds would not be cold before new tenants would have moved in.
The local authorities are losing considerable revenue as a result of not being able to let houses. People attending our clinics advise us of vacant local authority houses. However, on investigation it is often the case that the tenant is in a local care home and hopes to return. The tenant cannot be evicted once he or she pays the rent. However, there are cases where houses vacated by families and individuals are left for months on end with nothing done to have them let again, which is wrong.
A local authority inspector should carry out an annual check of a house to ascertain whether it is being maintained or what damage has been done. There should be some way of recovering the cost of any damage done from the tenant. It is wrong that local authorities have had to spend enormous amounts on money refurbishing houses for the same tenant who had vandalised it. In the past I saw a house where £7,000 worth of damage was caused to a house by the sitting tenant who had the audacity to approach the local authority to have it refurbished. The house had to be refurbished, otherwise the tenant would have had to move to another house with the prospect of the same problem recurring. That is going too far, but it is the only way the local authority had of dealing with the situation. Responsibility for maintenance will have to rest with tenants. There should be estate management in every estate. Everybody should be made to participate and nobody should have the right to opt out.
I wish to raise the issue of management companies, how they treat some of their tenants and how they operate but time does not permit. Some are terrible while some are very good. We could look at some of the schemes in place in, say, New York where management of a block is taken on by the tenants and, in many cases, is done much better than by a management company.
I welcome the Bill, which we could debate for a long time. There is a definite responsibility on local authority tenants to maintain houses to the highest level, otherwise there should be a formula whereby the local authority can charge them a maintenance cost to ensure the houses are properly maintained. Public money goes into them initially and they are public property.
Senator Buttimer mentioned the sale of council flats. If we go down this road again we should ensure that the clawback system is such that people do not make some of the fortunes that were made in certain areas of the city when local authority houses were resold.
Senator Nicky McFadden: I welcome the Minister of State, Deputy Michael Kitt, to the House. I welcome the Bill and the majority of its provisions, especially in respect of anti-social behaviour, the rental accommodation scheme and incremental purchase. However, I share the disappointment of my colleagues in regard to the omission of homelessness, a matter to which I shall return.
Having recently been a member of a local authority I can testify that anti-social behaviour is the single biggest heartache for a local authority and elected members. How does a local authority support people who are trying to live their lives beside neighbours who have no regard and no respect for local authority housing? I share Senator Ellis’s sentiments that people must be made responsible for the maintenance of local authority housing. I acknowledge the research done by the Oireachtas Library in putting together a document on the Bill which is easy to understand.
While the State is absolved from any obligation to house people who have been engaged in anti-social behaviour and can evict them, it does not happen very often. I understand there is an obligation to look after children. I represent a number of local authority housing associations and residents associations which are afflicted by people who are wrecking their houses and the whole neighbourhood. The Health Service Executive can refuse to pay rent supplement but I do not know if this ever happens. In my estimation it does not. If people are moved from a local authority house they approach the HSE and get rent supplement. They then move into a private estate and proceed to carry on with the same anti-social behaviour.
The local authority of which I was a member is not building as many houses as heretofore. More people are getting rent allowance and moving into established old housing estates and proceeding to destroy them.
I welcome the provision in the Bill which deals with people who misuse or sell drugs. That is the kernel of anti-social behaviour in housing estates. I shall take the issue of those who inhabit our local authority housing estate a little further. I question whether it is the tenant who is in receipt of the contract from the local authority, the hangers-on or the people the tenant invites into the house who cause the trouble and the anti-social behaviour. I am disappointed the Bill does not address that issue. In my experience — since 1999 I have been a member of a local authority — it is the bad behaviour and evil in some of the partners who live in our local authority houses, who are not meant to be there, that cause all the trouble, especially in the area of drug dealing. The Bill provides for people who misuse or sell drugs but not people who take drugs. Users of drugs are high and irrational and they are the people who cause the trouble.
I shall relate an incident that took place on a confirmation day. The ice-cream van drove into a housing estate and the children were queuing up for ice-cream in their finery. A man who was high on drugs was brandishing a knife. He was not meant to be living in the housing estate in question but I and everybody else knew he was there. That is an area that needs to be seriously addressed. Senator Ellis said that an inspector should check out the condition of houses and how they are maintained. It is equally important that an inspector call and see who is residing and who is meant to reside in houses owned by the local authority.
The other area about which I am concerned in regard to anti-social behaviour is passing the buck — the local authority passing the buck to the Garda, the Garda passing it back to the local authority — with the result that the tenant is obliged to adhere to the tenant handbook and falls between two stools. Nobody takes responsibility. I welcome the Bill but is provisions must be implemented.
The rental accommodation scheme is a good scheme given that there is not as much land in urban areas to build as many houses as heretofore. However, I am disappointed at the uptake of the scheme, some of the reasons for which were mentioned by the Minister of State. Why do landlords not get involved in this scheme? The tripartite issue regarding maintenance is serious, as are the problems surrounding non-tax compliant landlords and tenants being concerned about security of tenure as opposed to getting a local authority house. Enticements could be given to landlords. A number of landlords with whom I deal who would like to rent to local authority tenants are not aware of the existence of the rental accommodation scheme. There would be a better uptake of the scheme if more people knew about it, especially in this climate.
There is a need for more joined-up thinking between the local authority and the HSE on the matter of rent allowance. I would like clarification on this matter. In my local authority if one receives rent allowance for 18 months one is entitled to avail of the RAS. The Bill does not mention it and I wonder if it is a national policy. The Bill states that the rental supplement scheme is a short-term scheme. However, that is a contradiction, if we expect those who wish to take up the RAS to be on the supplement for 18 months. That will not work, especially considering that there is so little local authority housing available. It is a disincentive to the RAS and might be one of the reasons people are not taking it up.
I welcome the re-sale of properties as an aspect of the Bill. People are now able to sell their houses and re-mortgage them.
My colleague, Senator Hannigan, raised a point about single men. There is a changing dynamic in society and men who move out of the family home and wish to have access to their children need accommodation. There is no provision in this Bill for single men. I have raised this point at local authority level but we must provide such housing on a national scale.
With regard to anti-social behaviour, entire housing estates can become run down and disturbed because of a number of individuals. The Minister of State referred to the issue of “residualisation” in his document. I find that term very interesting. It is not something I had heard of before but I understand that it is a process whereby a number of people move out of a neighbourhood because it is no longer desirable. I have first-hand experience of this. It happens when local authorities and private landlords neither care for nor respect the dynamic of the families they put into a housing estate. A way to avoid “residualisation” is to put in place community resources, amenities and services for families to help them to live together. This is not happening. The only way people may be encouraged to live in harmony, and that anti-social behaviour may be abolished in “bad” estates where planning is not to the level we want, is to put in resources and community workers. That is the only way to solve the problem.
I am appalled to see that the people who most need our support do not feature in this document. The most vulnerable in society are those who have nowhere to live. We have just come from a Simon Community launch and therefore this failure of inclusion is outrageous. There are at least 5,000 homeless people in our society and I cannot see how we can progress the issue if we do not even mention them in the Bill.
Senator Brian Ó Domhnaill: This Bill will improve services and delivery and give effect to the programme of social housing reform. These are outlined in the Developing Homes, Sustaining Communities document, a policy document published in February 2007 by the Department of the Environment, Heritage and Local Government. It updates provisions in previous legislation and replaces nine housing Acts from 1966 to 2004.
The new document has amendments that I welcome. It gives extended powers to elected local authority members but also deals with a number of specific, clearly defined areas. The Bill provides for measures with regard to how social housing is delivered by housing authorities. The Minister has new powers to issue policy directions with which housing authorities must comply. There are guidelines to which housing authorities must have regard in the performance of their statutory functions. That is highlighted in Sections 4 and 5 of the Bill.
Section 10 contains a comprehensive statement of housing services provided by local authorities. There are new powers for elected members to make housing services plans for the delivery of housing in their areas. They refer to social and affordable housing supports that are in line with the housing strategies of respective county development plans. These plans will be implemented through three-year programmes drawn up by managers enrolled each year. Elected councillors will have a key input into these plans.
It is also important to look at the value for money element of building houses in local areas. Because I come from a rural county I know that one of the best ways to house people on a value for money basis is available through the specific instant cottage scheme. I very much regret that my local authority in County Donegal has taken a backward step in terms of developing these houses. This is against the wishes and the best interests of elected members who wished to see specific instant cottages developed because they are better value for money.  If a scheme of houses is to be built the council or the Department must purchase the land and then build the houses. In the case of specific instant cottages the land is provided by the applicant or the applicant’s family and all that must be done is build the house. They are better value for money and they permit the fabric of rural townlands to develop and continue. If people want to live in rural areas they must be supported in doing so. It must be impressed on local authorities that they should explore this avenue and avail of this scheme as far as possible.
A number of Senators referred to single male applicants and this is an issue across the country. Because of the system now in place single male applicants find it extremely difficult to obtain local authority housing and may be on the housing list for many years. Some never get houses. That problem must be addressed by local authorities. I am not sure how it will best be done. Perhaps a percentage of available houses might be allocated to single males or females. The issue must be examined further.
Another emerging scenario is that of Irish people living abroad who wish to come home. People emigrated from these shores in the decades between the 1940s and 1970s because they could not find work in Ireland. They left here to find opportunities and employment abroad and built up such countries as England, Scotland, Wales and others. Now, when they might wish to come home they cannot afford to do so as many may not have pensions. The Safe Home organisation, based in the Leas-Cathaoirleach’s home county, does a great deal of work in this area. It has been able to house people not only in County Mayo but, by working with other local authorities, also in counties such as Kerry, Donegal and others.
A mechanism should be made available, with the assistance of the Department and the support of the local authorities, to set aside a number of houses in each county for returning emigrants who cannot afford to come home on their own. Not only would such people be returning home, those who have an eligible pension also would be bringing it home, which would constitute a revenue stream into a local community. I suggest this measure also could be considered.
The Bill makes statutory provision for a number of important social housing supports which include a new incremental purchase scheme, whereby existing social housing tenants and households that qualify for social housing support will be helped to become owners of houses that are newly built by housing authorities and voluntary and co-operative bodies. Full ownership of the house will be transferred to a household on purchase of an initial share of the equity. The housing authority or body will charge the property for the proportion of the equity not paid for and will release the charge in equal proportions for each year the buyer occupies the house until the charge is completely eliminated. The incremental purchaser will be able to resell the house at any time but will have to pay the housing authority or body that proportion of the proceeds equivalent to the prevailing charged share of the equity. This measure is outlined in sections 35 and 40.
Reference was made to the rental accommodation scheme, RAS. I greatly welcome the steps being taken in the Bill to place it on a statutory footing. The Bill provides for a comprehensive statutory framework for the provision of rented social housing through leasing or contract arrangements, notably the RAS, which was introduced in 2005. Essentially, as previously noted, it involves the local authority progressively taking responsibility for accommodated persons who are in receipt of social welfare rent supplements and who have a long-term housing need. Under the rental accommodation scheme, the housing authority pays the rent to private landlords who rent the accommodation back to the local authority.
While this is taking place sporadically, it is not happening nationwide. In my native county of Donegal the rental accommodation scheme is operating in the urban centres such as Letterkenny or Buncrana, but not in rural areas. While I am unsure whether these provisions are the answer, this is a step forward in that people may have longer term housing security by being housed in a dwelling for which a lease agreement has been entered into between the local authority and the landlord. Consequently, those affected will have some security because they will be aware they will be there for three or five years, as they try to make progress. The introduction of the statutory framework for the rental accommodation scheme will be welcome and beneficial and allow tenants to avail of it. More importantly, it will force those local authorities not rolling out the scheme, for a number of reasons, to so do.
Overall, the Bill is excellent legislation. It will support those who seek housing and support local authority members who ultimately are charged with the responsibility for drawing up the frameworks referred to in the legislation. I wish both the Minister of State at the Department of the Environment, Heritage and Local Government with responsibility for housing, Deputy Michael Finneran, and the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Michael Kitt, who is present, well in their efforts to move forward with this legislation. It will support those in greatest need, that is, those who seek social or affordable housing and who are unable to get on the housing ladder on their own.
My colleague, Senator Butler, mentioned the possibility that given the current economic climate, local authorities could negotiate with financial institutions when the latter find it necessary to take away property from those owners who are unable to make repayments. There is an opportunity whereby the local authorities may be able to work with the financial institutions in some way. Perhaps a mechanism could be found in this regard to assist a person who is living in such a house before that person finds it necessary to apply for a local authority house. Such persons should be supported in the houses in which they live, were they to encounter difficulty in paying the mortgage. Perhaps local authorities can help in this regard, although from a financial perspective, I am unsure how this could be worked out. However, this issue could be explored through the Department of the Environment, Heritage and Local Government in conjunction with county managers and local authorities nationwide.
Senator Pearse Doherty: Cuirim fáilte roimh an Aire agus roimh na díospóireachta seo ar Bhille na dTithe (Forálacha Ilghnéitheacha) 2008. Nuair a fhéachann muid ar chóras na dtithe sa tír, níl dabht ar bith go bhfuil muid i gcruachás. Nuair a fheiceann muid go bhfuil 44,000 teaghlaigh nó daoine aonaracha ar liosta feithimh na gcomhairlí contae ar fud an Stáit, léiríonn sin an cruachás. Chomh maith leis sin, tá 36,000 páiste ina gcónaí in árasáin a bhfuil droch dóigh orthu. Rud is measa fós, tá 5,000 duine gan teach agus iad ina gcónaí ar na sráideanna, i mbrúnna nó, i dtithe leaba agus bricfeasta ar fud na tíre nó in árasáin práinneacha.
Tá seo uilig ag tarlú i ndiaidh deich mbliana den tíogar Ceilteach agus i ndiaidh deich mbliana inar tógadh na mílte tithe go príobháideach. Má amharcann muid ar na figiúirí i dtaobh 2006, feiceann muid gur tógadh 80,000 tithe príobháideacha sa Stát. Léiríonn sin go bhfuil córas na dtithe sa tír agus an stráitéis atá ag an Rialtas ó thaobh tithe de go huafásach ar fad. Tá na figiúirí os ár gcomhair. Chonaic muid na figiúiríó dhaonáireamh 2006 a léirigh go raibh 70,050 teach folamh sa Stát. Níl a fhios agam cén dóigh inar féidir le Rialtas nó Aire ar bith bheith sásta leis na figiúirí sin nuair atá 5,000 duine sa Stát gan díon.
I welcome the debate on the Housing (Miscellaneous Provisions) Bill 2008. Both the debate and the legislation are important, as undoubtedly our housing system is in crisis. Almost 44,000 households are on local authority housing waiting lists throughout the State. These households include 36,000 children who are living in inadequate or inappropriate accommodation. At the most acute end of housing need, 5,000 homeless people are living on the streets, in hostels, bed and breakfast or other forms of emergency accommodation.
The recent housing boom, during which 80,000 private sector houses were completed in 2006, our housing system and Government housing policy continue to fail those most in need. The most graphic demonstration of this was revealed in the 2006 census, which found that there were 270,000 vacant dwellings throughout the Twenty-six Counties, including houses, flats and holiday homes. In Dublin alone, 10,000 unsold properties remain on the private market, many of which are two and one-bedroom properties and some of which must be suitable for providing long-term homes for people experiencing homelessness. This was the position during a time of economic growth. What will be the levels of housing need 12 months into the recession? These are some of the issues that Members must ensure are catered for in the Bill when it is considered on Committee Stage. One already gets some sense of the coming difficulties, as charities such as Simon, the Society of St. Vincent de Paul, Threshold, Focus Ireland and Merchants Quay Ireland all report a significant recent increase in demand for their services. I commend these organisations and thank them for providing Members with information in advance of today’s debate. This is the context in which Members must debate the Housing (Miscellaneous Provisions) Bill 2008. The question one must address is whether its contents will assist in making the position better or worse.
Sinn Féin welcomes the commitment of the Minister of State at the Department of the Environment, Heritage and Local Government with responsibility for housing, Deputy Michael Finneran, to improve housing services. Moreover, as the Bill primarily is intended to provide a legislative footing for the 2007 policy statement, Delivering Homes, Sustaining Communities, it holds out potential for progress with regard to housing regulation and provision. However, on first reading it is clear the Bill is deficient in a number of ways and I signal to this House today that it is our party’s intention to bring forward detailed constructive amendments on Committee Stage in the Seanad and, if necessary, the Dáil to strengthen the Bill.
Sinn Féin has a number of initial concerns that I would like to highlight. The Bill, for the first time, provides a statutory definition of social housing. Unfortunately this definition not only includes social housing as we generally understand it, namely, local authority and voluntary sector housing, but also tenant purchase and the rental accommodation scheme. This is a very dangerous move as it signals the Government’s intention to move away once again from direct provision of public housing in favour of sale or private rental sector options.
The Government is already significantly behind on the national development plan commitments in terms of social housing build. It is even further away from the National Economic and Social Council 2005 recommendation to ensure the State has a total social housing stock of 200,000 units. In this context, such a dilution of the legal definition of social housing can only mean one thing: the further erosion of Government commitments to ensure the State has a sufficient stock of social housing to meet the needs of those who continue to languish on local authority waiting lists.
It is also disappointing that the issue of homelessness is not addressed in this Bill. The Minister of State, Deputy Finneran, launched the Government’s new homeless strategy, The Way Home, in August. The centrepiece of the new strategy is the objective of ending long-term homelessness by 2010. That date is fast approaching and many of the legislative commitments promised in the strategy could and must be included in this Bill.
Sinn Féin is also concerned about the lack of detail with respect to the anti-social behaviour strategies contained in the Bill. We have long argued for stronger powers and more resources to enable local authorities to respond effectively to anti-social behaviour problems. In principle, the development of anti-social behaviour strategies is a good thing but the legislation lacks clarity and detail.
We want to be constructive in this debate. We want to work with the Government and other parties to improve this Bill. In this spirit I stress that we believe the Bill to be a valuable opportunity, if positively amended, to empower local authorities to provide better housing services, especially to those in greatest need. I urge the Minister of State to approach Committee Stage with an open mind and heart. We can shape this Bill into something deserving of all communities across the State.
Senator Lisa McDonald: I welcome the Minister of State to the House and the broad thrust of the Bill. In terms of the structures which many local authorities have been working through, it is important to have them in legislation because much work has been done through strategic policies etc. in the better local government action plan in the past five or six years.
There are some issues which must be mentioned, the first of which is anti-social behaviour. All the Senators who have spoken before me today have mentioned this as a significant scourge on society. To a certain extent the local authorities see it as such a problem because they do not have the teeth to deal with it. I am not sure such teeth will be provided in this Bill. When dealing with criminal behaviour, the Garda clearly must be involved.
If we are to go down the road of strategising the problem and not go any further, we will not be taking enough action. I worked on a local authority until quite recently and we would sit down, get a plan together and produce a policy for driving an area for a particular period. However, if there is no capacity to deal with the issue, our action will not work. I do not mean to be a merchant of doom but I suggest the local authorities be allowed set up a committee for looking at and dealing with the problem with a view to resolving it adequately.
This is in preference to just giving the power to strategise on the matter. We all know the problem of anti-social behaviour is desperate and the people involved must be dealt with but the issue is how this can be done. Such action possibly needs cross-departmental support with regard to counselling or drug related habits etc. I am not sure the policy of buying a house in a private housing estate and putting offending families into it will resolve anything. At the end of the day we must remember such people must be put somewhere.
If we are to move people from a local authority house, what is the next stop and where will they end up? Many end up on the street or in flats throughout towns and villages — usually towns — where other people live. They seem to just squat in them. I am thinking of one example but most of us would have come across similar examples. The Garda must be involved but as a landlord, a local authority should have the powers to deal adequately with anti-social behaviour. Such a power is not mentioned in this Bill.
The legislation must be policy-driven and all local authorities will welcome the fact they are being given the powers to strategise and put policies in place. Many already have such policies in place. The issue of liaison with the Garda must be dealt with and there is a question of whether we need a garda in each area responsible for the matter. Will the policing committees deal with it? These issues must be fleshed out in the Bill because it will be a wasted opportunity if they are not.
Dysfunctional families are dysfunctional for a reason. Local authority staff should be allocated to the area, and the social workers in the local authorities such as Wexford County Council, for example, are fantastic. They do trojan work and although they probably need more support, they need to know where to bring such people. Transient housing is not dealt with in the Bill but we may need to go down that route as a stop-gap solution. It would not be rehab but I have a similar concept in my mind. These people need to have their hands held through what is a turbulent time in their lives. Their actions affect neighbours and there is no excuse for that. I would like to see the issue fleshed out and perhaps we could deal with it on Committee Stage.
I heard Senators mention today the issue of single fathers and single men. In Wexford town there are 600 single men on the housing list. There are more people looking for single-bed units or units for a single person to live in than there are on the family list. This tells its own story. One of the biggest pressure points in society now is the breakdown of marriage which creates significant pressure on people who cannot afford to fund two households. Such people need to be taken into consideration.
It is usually the mother who stays in the family home with the children and it is generally the man who moves out. I am not saying this is right or wrong but it is the reality. We must provide for these single men. I note that under section 22, the Minister is provided with the powers to regulate with regard to allocation. This needs to be added to and a particular policy must be put in place for single men.
When I say “single men” I refer to divorced men and those with families who wish to have access to their children but who may not have provision for them to stay overnight. This all leads to societal breakdown which we have a great opportunity to deal with in this Bill. We should include these issues because there are more problems than just a lack of housing. Such problems lead to other issues such as suicide, drug use and a general deterioration in the fabric of society.
I wish to discuss rural housing. Unfortunately I do not see it dealt with in this legislation. When I say rural housing I refer to rural towns and villages. There is a national campaign for local authorities not to destroy the landscape with urban sprawl and spreading out towns. This has led to a policy for high density housing. While it may suit the cities it is not going down well in rural towns. I brought a lady who had a serious housing need to a four storey block of apartments, which would not be considered high-rise in some areas, but it is in Wexford town. She had a dog, a child and a pram, and said, “Who will I bring up the stairs first? If I bring the dog up the child will be on his own”. It reminded me of the story of the fox and the goose in the boat with the farmer and the grain crossing the river, and the problem of who to bring over first. She said she did not want it, even though it was a new apartment. We need to look at the design of our housing. Flats and apartments do not work everywhere. In Wexford town we have two unique developments where the door opens onto the street.
With regard to Part V, local development plans for local villages have fared quite well with social housing in recent years. However, the villages that did not have local plans, and where the local authority did not have capacity to deliver on local plans, got nothing. That has led to a burgeoning of one parish while another parish with a local school and plenty of capacity loses out.
Sewerage facilities need to be looked at. I do not believe our housing plan suits rural Ireland. The villages in rural Ireland are unable to house their own people, which is a shame. We need to look at that. If somebody is born in a village there should be a house there for him or her. They should not have to move to the next village which might be undergoing rapid development because it has a local area plan when there is no capacity to buy rural social and affordable housing.
The incremental purchase scheme is an excellent initiative. It is something we could look at in this climate for people in the private sector. From a conveyancing point of view it struck me as a new initiative. One could have equity in a house based on part payment; the deed would not be signed until the very end. It is a model that could be used in the private sector.
If no land is available, no land has been bought and housing has slowed down, Part V will not deliver in that regard. We need to look at the land bank situation and how we can buy more land. Given the fact that prices have dropped in recent times, it is perhaps a good time to buy.
I welcome the broad thrust of the Bill. Subject to the caveats I have set out, it is excellent legislation.
Senator Paul Bradford: I am glad to have the opportunity to speak on this important legislation. Housing legislation is always very interesting from a policy perspective, because it is one of the few areas of Government policy where, even with limited resources, different and interesting political and economic choices can be made. A significant difference can be made to the livelihood of people if positive housing policies are put in place.
If we look back to the late 1980s and early 1990s when the economy was beginning to take off, and we could have predicted then that there would be year-on-year significant economic growth, that Departments would have surpluses rather than deficits and that there would be unending boom, nobody could concede at the end of that era we would have as many people on the housing lists, perhaps more than in the mid 1980s, that we would have a poor housing stock in many towns and villages and that we would have no grants for disabled people or the elderly. It would not be a credible political argument, yet that is now where we find ourselves.
This legislation stems from the report, Delivering Homes, Sustaining Communities, which was published in February 2007. It was a document everyone welcomed and was happy with. What has happened since then? Most local authorities have no building programme and vital schemes for the elderly and disabled, which at minimal cost can make a major difference to many people, have come to a standstill. Last week I attended the Oireachtas Joint Committee on the Environment, Heritage and Local Government — I am not a member — when this matter was debated. The officials from the Department gave a fine presentation, but the bottom line of their argument seemed to indicate no additional money was available for this calendar year. Hundreds of applications to Cork County Council for urgently needed house improvement works in late 2007 and early 2008 are on hold or being filed with no attention being given to them. We were advised that the success of the scheme has resulted in an increased demand for money over the last five or six years, from €10 million per annum to €55 or €60 million. That is a lot of money.
This is a scheme we cannot afford to abandon, yet that is what has happened. Additional money provided to each local authority may help in paying grants for work already done but it will not provide for additional grants to be approved. That must be put at the top of the Minister’s agenda. It is important to get these vital grants up and running because the disabled, the elderly and children are being affected on the front line by the policy decision of the Minister’s Department. That trend should be reversed.
There are many aspects of the legislation to which I would like to refer but time is limited. I welcome the Bill in so far as it goes, because it brings forward some new ideas. They are all helpful, but money will be at the core of the success or otherwise of the Bill, and it is difficult to know how much money the Minister and his Department is willing to commit. The Leas-Chathaoirleach and I were both involved in politics in the local authorities in the 1980s — perhaps the Minster was also — at a time when the country was the supposed to be almost bankrupt. We still provided money for social housing and local authority programmes. It is interesting to look at the house building figures for the period 1985 to 2005. The so-called cash-pressed years of 1984 to 1986 were the years when the local authority building programme was almost at its very height, because there was the political will to look after the social housing needs of a certain sector of the community. The political will does not seem to exist at present.  This needs to be looked at again and we need to give priority to those who cannot afford to house themselves.
Programmes such as the shared ownership scheme and the affordable housing scheme, both of which I welcomed, have made a positive difference. However, they are not sufficient. Insufficient financial resources have been put into the areas covered by social housing policy. To paraphrase a political slogan used by the Minister of State’s former leader, a lot has been done but there is more to do. While affordable and social housing and shared ownership loans have worked to an extent, more financial input is required from the Department. I hope the Minister of State will be in a position to meet this requirement.
Several speakers referred to voluntary housing bodies. Senator Brian Ó Domhnaill, for example, referred to one such body in County Mayo. When I received correspondence from the organisation in question it rang a bell because one of the proponents of the scheme is our former colleague in the other House, Mr. Jerry Cowley. The group makes a valid case for receiving further support. I hope the Minister will look favourably on its request. Voluntary housing organisations are doing good work throughout the country and have a strong role to play in meeting the housing needs of communities.
The incremental purchase scheme provided for in the Bill is a welcome and positive step forward. Without wishing to give a history lecture, in 1987 the then Minister for the Environment, Mr. Padraig Flynn, who has since vanished from the radar screen as people pretend he never existed——
Senator John Carty: He has not vanished.
Senator Paul Bradford: In 1987, he introduced a progressive tenant purchase scheme which made a difference. Generous discounts were made available to local authority tenants who wished to purchase their homes and thousands of them chose to do so. I was an advocate and fan of the scheme which lasted until 1989 because the substantial discount available offered tenants value for money. The tenant purchase scheme which has been available for the past five or six years has not worked because it offers a maximum discount of 30%. Having checked the position with various local authorities, specifically in County Cork, I learned that take-up of the scheme is very low, the reason being that houses are valued at current market value and the maximum discount of 30% applies irrespective of whether a tenant has been living in a local authority dwelling for ten, 15 or 20 years. The scheme is not as attractive as its predecessor and should be reviewed.
I am aware that a different scheme, the incremental purchase scheme, will be introduced under the legislation and will operate in tandem with the tenant purchase scheme. I hope the new scheme will succeed and look forward to tenants availing of it. While I have not studied it in detail, it appears to be advantageous for certain groups of local authority tenants. We should aspire to allowing the maximum possible number of people to buy homes as it is good for local authorities, communities and society. This aspiration should be at the top of the Minister of State’s agenda.
I look forward to a debate on Committee Stage on the need to finalise a tenant purchase scheme for local authority tenants of flats and small dwellings. I understand the Taoiseach indicated in the other House that it may be possible to amend the Bill on Committee Stage to provide that local authority flats can be purchased. Persons living in local authority flats and other small dwellings are not second class citizens. Under current legislation, however, they are not legally able to purchase their homes in the majority of local authority areas. We must take a flexible approach which allows such tenants to purchase their homes. I hope the Minister will act on the statement given by the Taoiseach in the other House in response to a query made on the Order of Business.
The rental accommodation scheme is useful and successful. I was interested to learn that take-up of the scheme has been weak. We need to sell and advertise RAS more effectively. Although I consider myself more a local than national politician and know housing grant schemes and local authority housing programmes very well, I did not become aware of the RAS until 12 months after it was introduced. The scheme offers a solution for a certain group of people and is good for landlords and tenants. It also benefits the Minister who can console himself that the tenant’s name is removed from the housing list.
The problem with the affordable housing scheme is that houses are not affordable. Despite disappointing take-up, it should be possible to boost the scheme in the current downturn in the housing market. At a time when people want houses, builders need to sell houses and construction workers need to keep their jobs, it should be possible to find a solution that will benefit all parties, whether taxpayers, tenants, builders or auctioneers. Fresh, original thinking always has a role to play in housing policy. I look forward to discussing these issues in greater detail on Committee Stage.
Senator John Carty: I welcome my former colleague in the other House, the Minister of State at the Department of the Environment, Heritage and Local Government, Deputy Michael Finneran, to his former haunt. I understand this is his first engagement in the House since his appointment. I am sorry he did not hold his current portfolio when I was a Deputy because a substantial amount of housing was built in County Mayo in conjunction with Clúid, CLÁR IRD, the Society of St. Vincent de Paul and other voluntary bodies. I have a couple of other projects lined up and I have no doubt the Minister of State will look after me during his term of office.
I welcome the Housing (Miscellaneous Provisions) Bill 2008 as it will improve housing services and their delivery by giving effect to the programme of social housing reform measures outlined in the policy document, Delivering Homes, Sustaining Communities, published in February 2007. In terms of how social housing is delivered, sections 4 and 5 give the Minister new powers enabling him to issue policy directions with which housing authorities must comply and guidelines to which housing authorities must have regard. I welcome this measure as it will give strong policy direction to local authorities. Mayo County Council, my local authority, does a good job in performing its housing functions and the new provisions will strengthen its hand. Sections 14 to 18, inclusive, provide new powers for elected members to make service housing plans for the delivery of services in their areas.
I once chaired the housing strategic policy committee of Mayo County Council. One group of people, male spouses who had to leave the family home in cases of marital breakdown, often came to our attention. While it is correct that female spouses and children should remain in the family home in the event of marital breakdown, many men leave home, often in fairly bad circumstances, and move into towns where accommodation such as single rooms is in poor condition. Local authority schemes should include apartments of one or two rooms specifically for the purpose of accommodating men in this category because many of them are unable to improve their lot due to personal circumstances and the accommodation in which they are living. In some towns, only the worst accommodation is available to them and many of them have a social disability.
Senator Feargal Quinn: I move: “That Second Stage be taken today.”
Question put and agreed to.
Question proposed: “That the Bill be now read a Second Time.”
An Leas-Chathaoirleach: I welcome the Minister of State, Deputy Moloney, to the House.
Senator Feargal Quinn: I thank the Minister of State for attending the House for this debate. The objective of the Bill is to save lives. Ireland has a rate of organ donation approximately half that of Spain, which has had what is termed a “presumed consent” system in operation for some years. There is no legislative framework in Ireland governing the use or withholding of consent in regard to the donation of body organs; the only other country that does not have it is Malta. This was highlighted in the report of Dr. Deirdre Madden on post mortem practice and procedures, published in 2006.
This Bill endeavours to tackle this issue by providing that consent would be presumed for certain permitted activities. In effect, the Bill would reverse the current position whereby one must opt-in to consent to organ donation and, under its provisions, if someone does not withhold consent, it will be presumed that person had consented. Such systems are currently operating successfully in a number of other European countries. I am advised that approximately 28 countries have some form of a system of presumed consent in operation.
I will attempt to explain the reason I am proposing this Bill; there is a personal background to it. I have known, as perhaps we all have, a number of people who have benefited from receiving an organ by the consent of the family of a deceased person. In some cases this has been the gift of life, in others it has improved their way of life. I will tell the House about the case of one young man, the son of a person who worked with me in Superquinn a few years ago. David Ryan was his name. He was 19 when he learned that the problem in his heart could only be solved by way of a heart transplant. He waited for a suitable donor and then after 18 months he and his family learned that a suitable match was available.
During the 18 months while they waited for a donor heart and during which time David got weaker, his mother, Margaret, contacted newspapers to highlight the need for organ donation. She ran a campaign with her colleagues and customers to promote the donor card scheme. On Good Friday 2000, when David was 20 years old, a donor was found and the operation took place. His mother, Margaret, told me of the joy when he was coming out of unconsciousness. She remembers it well - I talked to her again about it yesterday. David was unable to speak at that point but wrote “21 soon” to remind her of his upcoming birthday. Within two days he was on his feet, chatting, well on the mend and taking an interest in his new life. His mother described how even on that Easter Monday David watched the races from Fairyhouse on the hospital television and he appeared well on the road to recovery. His mother, other family members, friends and work mates were overjoyed.
Unfortunately, two days later, on the Wednesday after Easter, the transplant heart was rejected and David died on the following Friday. The medical advice was that the 18 month delay in waiting for the transplant probably contributed to his death. His mother, having had time to discuss it with David, was aware that he was happy to have his organs donated to help others. Margaret told me that she feels somewhat comforted in the knowledge that two people have a better life because of David’s donation. His eyes went to two people, one was a 25 year old and the other a 75 year old man.
At the same time in the same supermarket, two others were waiting for organ donations. These two colleagues were seeking kidneys and I saw their health deteriorate. One was Karl Carter, to whom I also spoke yesterday. He has successfully received a good match and is now well recovered. The other person is now waiting for her fourth kidney and has to spend a great deal of time on dialysis.
All that occurred eight years ago. Since then I have taken an interest in the whole question of organ donation. I was impressed at the interest in the subject and the work done by Dr. Patrick Condon in Waterford. He initially drew my attention to the different levels of organ donations in various countries. I learned that the number of organ donations per head of the population is much higher in Spain than it is in Ireland. The figure for organ donation in Spain is almost double the figure here. Since 1979, however, Spain has had a system which is the reverse of the Irish one; it is called a system of “presumed consent”. This means that when one dies and if one is a suitable organ donor, it is presumed that one’s organs can be transplanted to another person unless one has made it known that one does not wish that to happen. It is not only Spain that has that system, different variations and versions of it operate in different countries. Thanks to the good work of the Irish Kidney Association and the Irish Donor Network, Ireland has a respectable rate of organ donation, well ahead of that of Britain, which like us does not have a system of presumed consent.
This subject is worthy of more open discussion. The Bill I have put before the House takes into account many of the concerns of citizens about the implications of such a proposal. Some 67% of the Irish population support organ donation. They are willing to donate their organs to help or save the life of somebody else, but only 29% carry a donor card and that is the percentage who have accepted a donor card. When I went to get mine the other day, I had to search for it because it is eight years since I had it. Some 600 people are waiting for an organ donation in Ireland and 40,000 people are waiting for one in Europe. In Britain three people per day die as a result of not having received an organ donation.
I mentioned Karl Carter, a young man, who got an organ donation. He reminded me yesterday that donating two kidneys not only saves the lives of two people, it saves the lives of four people because the two people who each get a kidney come off of dialysis and two other people are able to go on to it. It seems a shame that there are people waiting for an organ donation and transplant and are unable to get it because our law has not gone far enough to ensure what we are setting out to achieve in this Bill.
I will refer to some aspects of the Bill that deserve mention. The central part of the Bill is section 3. I will summarise what it states and not mention all the legal terms covered in it. It provides that all persons shall be deemed, unless they have withheld consent, to have consented to permitted activities for scheduled purposes as set out in the Act. They are important elements because some people are concerned about the provisions of this Bill, and I can understand their cause for concern. They may believe that the legislation can be used for various other purposes which might not be acceptable.
I spoke to one mother whose baby died very early on. She informed me that she would have loved to have thought that, in death, her child might have helped someone else. However, she also indicated that she would have been extremely concerned if her consent had not been requested, if something had happened about which she did not know or if, as happened in the past when there was no legislation in place to cover such circumstances, part of her baby’s body had been sold to a company for use.
The Bill appears to be quite involved because it focuses, in clear terms, on matters such as permitted activities. The objective of the Bill is to assist doctors who identify possible donors in circumstances where such people’s organs cannot be harvested as a result of delays that occur. Let us consider what could happen if a doctor could rest assured that he or she could harvest an organ and save a life without breaking the law.
In the Bill, the aim is to ensure only permitted activities would be allowed. On first reading the Bill, some people were upset by the use of the word “storage” because it seemed to suggest that the possible aim is the storage of bodily organs. That is not the intention. I understand that even if organs are only being kept overnight, the term “storage” must be used. However, the objective is that there will always be a recipient for an organ before it is harvested. It may be the case that the relevant provision may have to be tightened up to overcome difficulties in this regard.
Another term which gives rise to concern is “commercial use” but this is not used in the Bill. This term is purposely not used because it is not a permitted activity. It must be remembered that the Bill is almost back to front in nature because only permitted activities are allowed. We did not include the term “commercial use” because we could not find a way to do so. There is a need to be very careful when dealing with this matter because we would not want to restrict the transfer of organs, especially in circumstances where, for example, the air ambulance employed for the purpose was owned by a commercial concern.
To make the job of medical professionals hoping to encourage the donation of organs easier, the sanctions in this regard are expressed in the context of civil rather than criminal liability. The concept behind this is to ensure that people would not be accused of being involved in criminal activity.
There are many worthy aspects of this matter which deserve to be debated. The Bill has been put forward for the purpose of saving and improving lives. It may not be perfect and I am sure there are parts of it that could be changed. In that context, it could be amended on Committee Stage. The Second Stage debate in which we are engaged is to ensure people have open minds in respect of this matter and that the general themes are discussed. I hope the legislation will be accepted and that we will be able to improve it on Committee Stage to alleviate people’s concerns. Those who expressed such concerns in the past would welcome the opportunity to ensure the Bill is improved. This debate will facilitate discussion of the legislation and the matters to which it relates. I urge the Minister of State and Members to keep an open mind with regard to the topic under discussion. I also urge the Minister of State to accept the Bill.
Senator Joe O’Toole: I congratulate Senator Quinn on the amount of work he invested in preparing this legislation, which is very important. It is my privilege to second the Bill.
I should declare a related interest in that my sister has been the national kidney and transplant co-ordinator for many years. I am, therefore, quite familiar with many aspects of this matter and I know families that experienced great joy and others who underwent great bereavement. The circumstances dictate that one family donates while the other receives. I have often thought that the people who work in this area must deal with the extraordinary heights and depths of emotions, namely, joy and bereavement. Their job must be very difficult.
I completely support what is proposed in the Bill. For many years, people have ticked the box on the back of their driving licences to indicate their willingness to donate their organs. I have argued on numerous occasions that we should do what Senator Quinn’s Bill proposes, that is, introduce the notion of presumed consent. The latter represents the way forward.
I should have welcomed the Minister of State, Deputy Moloney, and wished him well with his portfolio. I am aware of his concerns regarding matters of this nature because we discussed them in the past. I apologise for not welcoming him at the outset. If the Bill is not to the exact liking of the Department in every detail, I would be happy if the Minister of State would say that, indicate the changes that need to be made or commit to introduce parallel legislation. However, I ask him to concede that there is a need for legislation in this area, if not along the precise lines of the Bill then along similar lines.
There are many levels between where we currently stand — with no legislation — to a position of presumed consent. If the Government is not prepared to go as far as Senator Quinn wants it to go in his Bill, which, in my opinion, represents the correct way to proceed, there is also the option of considering the notion of a required request. Where a person with healthy organs is fatally injured, there should be a requirement that his or her family should at least be requested to donate those organs. When a tragedy occurs and when a family is in the midst of grief, it does not cross the minds of its members that there is one small positive they can take from their bereavement. If they had been asked, many families would have been happy to accede to a request to donate their loved ones’ organs. If the Bill, as proposed, were accepted, there would be no need for required requests because people would be asked the relevant question automatically.
In certain countries, presumed consent of the type proposed by Senator Quinn obtains. Let us consider the reality of what happens there. Discussions regarding organ donation often take place in or adjacent to intensive care units in hospitals and involve families that are grieving. There is usually a great deal of emotion and activity involved. To my knowledge, even in circumstances where it is widely known that a person has consented to his or her organs being donated, the people present to harvest those organs will invariably discuss the matter with the next of kin before proceeding.
Senator Quinn and I are not proposing that someone’s next of kin should be pushed out of the way and that the relevant medical professionals should then harvest whatever viable organs remain. Those charged with harvesting organs go about their work in a sensitive, caring and understanding manner. They work in a way that draws the next of kin and those who are grieving into the process. I have met people who stated that they never got over the shock or grief of losing their son or daughter and that there is never a day on which they do not remember him or her, but that at least they receive a card from the transplant society or unit or from the parents of the person who benefited from the donation of their son’s or daughter’s organs, thanking them once more. Each year they are reminded that there are people with their son’s kidney, eye or otherwise. There is some element of consolation there. Of course, it is poor consolation for the loss of life but at least there is a feeling that they, or their dead child, has given something to society which lives on in a positive way.
A very important part of drawing in the next-of-kin into these situations is the gift element. Although the next-of-kin are expressing their grief and shock about the death, it is helpful to allow them to respond positively to the request of the person who has died. These are important elements which come within the remit of Senator Quinn’s Bill. As he said, the Bill is written in cold, technical language but we need to think about how it is implemented. I am glad he gave the examples of the gift of life given to people because we have seen that work.
A very good friend of mine from the Minister of State’s constituency had kidney failure and was on kidney dialysis for many years. He finally got a kidney but it was a flawed and it had to be taken out. We were all devastated. He got a second kidney but it was rejected. Again, it was devastating to see this happen. He got a third kidney more than ten years ago. It is working perfectly and he is living a very healthy life, playing golf every day. That was a very unusual case but his life has changed completely.
It is important the Minister of State speaks in positive terms in his contribution. I would also like to hear him speak about the importance of a public awareness campaign. The Department is doing an audit of the harvesting, transplantations and donations taking place in Ireland currently. The situation in that regard is very healthy but it is important that this debate receives some recognition in the Department and that there is increased public awareness and education on the importance of a community, Government and political commitment to the elements proposed in this Bill, even if the Minister of State does not accept the exact wording as outlined by Senator Quinn.
There can be no argument against what Senator Quinn is trying to achieve. I understand people might want to amend the Bill or deal with it differently. There is never only one right way to find a resolution; there may be 24 right ways. I am not putting words in Senator Quinn’s mouth but I believe he wants to hear, and I certainly want to hear, that the Government will either accept this Bill or amend it.
Let us not leave the vacuum which currently exists and which should not be there. We need to legislate for this issue. The legislation is important not only for the reasons outlined by Senator Quinn but to show that this society cares about these issues, will legislate and deal with them and considers them important in our community. As long as we leave the vacuum, the finger can be pointed at us and people can ask what legislators are doing about it. I was not aware of the fact that Malta is the only other country in the EU which does not have legislation in this area. That is a sign for us to act quickly.
We are putting an issue of concern to many people on the agenda and are bringing it to the fore in our Legislature. It is an issue which in no way could be seen as party political or as divisive. I presume Members on the other side of the House would, in general terms, take a similar approach to us. It is important that message goes out. There may be slight differences in emphasis here and there but we want to encourage organ donation and ensure we facilitate it in legislation and that it comes into operation. That is what this is about and the reason I ask the Minister of State to support Senator Quinn’s Bill which I feel privileged to second.
Senator Geraldine Feeney: I welcome the Minister of State, Deputy Moloney, and Senator Quinn’s Bill. Like Senator O’Toole, I compliment Senator Quinn on his initiative in drawing attention to this very important issue. As he said, it is all about saving and maintaining lives. It is a very complex issue when one gets down to it because it involves emotion, sensitivity and the legal aspect, not to mention medical politics.
When preparing for the debate, I remembered coming into the House six years ago as a novice Senator to speak on stem cell research. I have been paying the price for that for six years. I was obviously on a side on which there were not too many other people. Perhaps I was a little bit liberal; I was certainly innocent. I feel much safer speaking on this Bill because I do not believe the big sticks will be out there to beat me.
The Government, through the Minister for Health and Children, is in the process of preparing a Bill to come before both Houses which will deal with all the issues Senator Quinn raised as well as other issues. It will cover the regulation of the removal, retention, storage, use and disposal of human tissue from deceased persons and consent for the use of donated tissues from living persons for the purpose of transplantation and research.
The Bill will also look at the options Senator Quinn outlined, namely, opt in, opt out and mandatory choice. The Minister has met many interested groups but she must put the issue into the public domain for intense public consultation and debate. Part of the editorial in today’s edition of The Irish Times supports what Senator Quinn proposed while one of the letters to the editor almost questions whether this is the right way to go. There are different views and it is right that the Minister engages in a consultation process and listens to the debate. Senator O’Toole, more or less, said the same to the Minister of State.
I will not go through all of what I have written because much of it is jargon covering what the Government proposes to introduce in its legislation and the Minister of State will deal with that. It is very important to bring a human aspect to such a debate. If one can humanise an issue such as this, one surpasses politics. I am very close to where Senator Quinn is coming from and agree with him that it is all about maintaining and saving lives.
Approximately four years ago, through politics, I was involved in a very sad case of a young woman in her early 40s who came from a very troubled background and who had attempted self-harm on two occasions. She attempted it on a third occasion by taking paracetamol with whiskey. She was a young professional woman, an accountant, and although she had come from a very troubled background, she was very bright and intelligent and had put herself through college. She turned out to be a wonderful young professional woman. She was admitted to a Dublin hospital and it was discovered her liver was severely damaged. Her family was called in — it was at this stage I was invited to become involved — and told that because she had self-harmed, she would not be looked on as an ideal candidate for a liver transplant. She was 42 years of age and was on her death bed pleading that she wanted to live. She was put on the waiting list, but did not live long enough to be called.
It is important these stories are told. There is a belief among the medical profession, probably because organs are so few and precious, that there must be criteria with regard to who will or will not receive a donated organ. However, it is difficult to watch a young woman lying in a bed with her family around her. The family of that young woman is still traumatised four years on and I am sure their pain will be as real in 44 years’ time.
Like Senator Quinn, I have a story to tell about organ donation. My brother-in-law in the US had a liver transplant 14 months ago. He was the father of three young children from seven years of age down to two years of age and was at death’s door. The whole family was so anxious that I inquired in Dublin whether a transplant could be done any quicker if he returned to Ireland, but in the middle of the night he got the phone call and he got to a hospital. Now, 14 months later he is doing remarkably well. He was home in Ireland during the summer and it was great to see him playing football with his young children again.
My brother-in-law’s story was broadcast in the US as part of a breakfast TV programme because the mother of the young male donor, who was involved in a road traffic accident, wanted to meet the recipients of her son’s organs. Just as in the story told by Senator Quinn, the two families have come together and send birthday and Christmas cards to each other, although they come from very different backgrounds. There is great love and affection between them. There is gratitude on the part of the recipient for his extended life and joy in the donor family because they have contributed to saving lives by donating their son’s organs.
I urge Senator Quinn to keep this valuable Bill on the agenda, but to wait and see what may be introduced by the Minister for Health. We are close on the issue and may find common ground, as happened previously on another Bill with which Senator Quinn was involved. I thank him for bringing his important Bill before us.
Senator Frances Fitzgerald: I welcome the opportunity to speak on the Bill and welcome the Minister of State to the House. I commend Senator Quinn of the Independent Senators for placing the Bill before the House and for using his Private Members’ time to discuss such a vital issue of life and death as the area of organ donation and transplantation.
We need more debate on this area as it can be a frightening area for people to think about. I agree a public awareness campaign is necessary, as well as further debate and discussion. It is a difficult issue to think about at any time, not just in a crisis situation. Research shows that when most people are consulted, they say they would be very happy to agree to be a donor and international research shows there is much good will and that donating is something people want to do. However, they do not always fill out the consent forms or tick the box on their driving licences.
A major 2006 international study found that presumed consent can give rise to a 25% to 30% increase in organ supply. This fact is quoted in the editorial in today’s The Irish Times. Senator Quinn, by raising the issue here, has already generated media debate, as can be seen in today’s editorial and letters page. The editorial stated:
As we know, many of these are young people. Our rate of donation is relatively high by international standards, but there is great scope for improvement.
I said earlier that many people are frightened about this issue. We need to provide detailed information on donation to the public. If we support Senator Quinn’s Bill there will be questions, as Senator O’Toole said, with regard to how the procedures will be carried out in hospitals, the kind of work that will be done with the families and the type of counselling and support that will be available. These issues must all be discussed.
A letter in The Irish Times today relates to the Spanish situation, where there is presumed consent. The letter writer makes the point that the Spanish policy was developed by the establishment of a transplant authority independent of all hospitals and consultants and that it set up a system of transplant co-ordinators between hospitals whose role was to counsel the families of recently deceased people in an appropriate and sympathetic manner. This approach must be an important part of any change we make here. Also, financial costs to the hospitals were dealt with by the independent authority. Financial costs are a factor and must be considered. Organ donation rates increased by 50% on the introduction of the independent transplant authority. There has been significant change in organ donation in Spain, first because it did as Senator Quinn suggests regarding presumed consent and then it developed how the programme would be run. We must take those lessons on board.
Our debate is important. I regret it looks like the Government will not support this Bill, but I welcome the news that the Minister intends to introduce legislation. I hope it will lead to progress. Perhaps the best thinking from Senator Quinn’s Bill will be taken on board by the Government. I am happy to support the general thrust of the Bill, namely, the idea that presumed consent to donate organs should exist and that if people do not wish to donate organs, they must withhold consent. This is common sense and we can learn from other countries. The objective behind this concept is to increase the amount of organs available for transplantation. Lives could be saved or improved dramatically by this measure. It is dreadful to think that people who die in accidents who would have been happy to donate their organs had not signed consent forms or it was not discussed with their families.
While I welcome the overall objectives of the Bill, I would like to make some observations and pose some questions. These matters are not insurmountable and could all be dealt with on Committee or Report Stage. I note in particular the concerns expressed by the Parents for Justice group. That group has been through a traumatic experience in terms of organ retention and is very concerned with regard to the removal and storage of organs. Those issues must and can be addressed. I wanted to mention the matter because they have e-mailed every Senator about it and we have to show sensitivity to their experiences. In regard to the issue of storage, for example, I am aware that a large proportion of donated organs are not used. Clearly, the issue of what happens to these organs must be addressed.
While I appreciate that the Bill respects parental authority and makes no effort to usurp it, I wonder whether the presumed opt-in should begin at a certain age. A family may not have considered opting out on behalf of a young child who died suddenly but there would be presumed consent in that instance. I am not completely sure about this issue but a debate which engages families is needed. We also need to raise public awareness on the implications of these proposals.
It will be important that good practices are followed in hospitals. Hospitals may be failing by omission in terms of not discussing the issues with families. Equally, a situation could arise as a result of insensitive handling. We need to have regard for Spain’s emphasis on best practice when we deal with people facing these circumstances. Senator Quinn might also comment on how organ donation will be dealt with in cases of clinical death.
While I agree with the thrust of this Bill, any measure of informed consent should be supported by a framework which enables the maximum number possible of successful organ transplants. I support the advancement of the Bill to Committee Stage and have briefly outlined the areas which I would like to discuss further. I thank Senator Quinn for putting this matter on the political agenda and urge the Minister of State at the Department of Health and Children, Deputy Moloney, to respond positively. I hope we can bring about an increase in donations and greater public awareness of the issues involved.
Minister of State at the Department of Health and Children (Deputy John Moloney): I thank Senators for the welcome they have extended to me. I want to make it clear that no political divide exists on this issue. At a time when our attention is on the economy, I commend Senator Quinn on his focus on saving lives. Differences of opinion may exist in one or two areas but I hope that, through this debate, Senators and the Minister for Health and Children, Deputy Harney, can work out the finer details and produce a Bill that meets everybody’s expectations. I thank Senator Quinn for introducing this Bill and for initiating the debate on this most important issue. My colleague, the Minister, cannot attend this evening but she has asked me to assure the House that she takes a great personal interest in the issue and is most anxious to hear the views of Senators and the general public.
On 23 September, the Government approved the preparation of the general scheme and heads of a human tissue Bill to regulate the removal, retention, storage, use and disposal of human tissue from deceased persons and consent for the use of donated tissue from both living and deceased persons for the purpose of transplantation and research. I have heard the story of David Ryan and have come across similar cases in my own constituency involving Harefield hospital. Processes which appeared to be successful had failed by the following week. As with Senator Quinn’s Bill, the legislative proposals approved by the Government will address hospital post mortems, which are voluntary procedures, as distinct from coroners’ post mortems, which are part of the legal process of determining cause of death. The Senator’s Bill encompasses consent for organ donation and I appreciate this is a driving force behind the tremendous work done by him in progressing his Bill. The Minister also proposes to address this in the Government’s legislation.
The Senator advocates moving to one of the two major systems for demonstrating consent for transplantation, the opt-out model, whereas the Minister is keeping an open mind on either opt-out or the other side of the coin, the opt-in model. There is also a third option of mandated choice, which is a variation of the opt-in system. These three models will be further examined by officials and the Minister has made a commitment that they will be subjected to specific public consultation. She has met various groups which have argued for one or other of the consent models and, as I have explained, is keeping an open mind until the public consultation has taken place. Preliminary public consultations were held last year by the Department of Health and Children on the general legislative requirements in the area of human tissue but few responses addressed the question of consent for organ transplantation in any detail. A more targeted consultation process with specific emphasis on consent for organ donation is now required. The first draft of the general scheme of the Bill will be prepared on the basis of the opt-in system but the Minister has made it clear that the reason for this is to offer an initial focus for public debate. Until the consultation has concluded, all three options will remain on the table and will be given equal consideration.
I will now describe the different models for demonstrating consent for organ donation. The opt-in system requires the consent of the individual or next of kin before organs or tissues are removed after death. This system is currently in place in Ireland, the UK, the Netherlands, Germany, Australia, New Zealand and Canada. The opt-out system is sometimes referred to as presumed consent because it presumes that all citizens consent to donate their organs after death unless they have specifically expressed a wish to the contrary. This model has been implemented in France, Italy, Spain and most other EU member states. The UK, which passed a human tissue Act in 2004 based on the opt-in system, is now looking at the implications of changing to an opt-out model, but I understand that the debate has not yet been concluded.
One of the points to bear in mind about the opt-out system is that relatives of the deceased are approached as part of the donor screening process to seek a medical history of high-risk behaviour. As part of this consultation, in most countries where the opt-out model is used families are given the opportunity to register an objection to the donation if they wish. Even where a state has the legal right to take organs, I understand that few hospitals will disregard the wishes of the bereaved family if doing so would cause them significant further distress at an already traumatic time.
This blurs the distinction between opt-in and opt-out countries and suggests other reasons for the difference in donation levels. I caution Senators that the Department has yet to consult the Attorney General on the substance of the proposals and it has been suggested by some that the opt-out model may have constitutional or other legal implications. Moreover, preliminary research by officials suggests that the consent model is not necessarily the determining factor in improving donation rates. Donation rates vary widely internationally and while Spain, the country with the highest donation rate, has followed the opt-out system, Ireland already has a higher donation rate than many other European countries which have adopted the opt-out model. Indeed, I have been told that the person responsible for introducing the opt-out model to Spain in the 1970s does not attribute the success of the Spanish organ donation system to this model but to other measures taken during the following decade.
Factors which may be of equal or greater importance to improving and sustaining high organ donation rates include the organisation of transplantation services at a local and national level, national protocols, public education and awareness and more targeted co-ordination within hospitals and between hospitals and bereaved families.
To date there has been little sustained public debate on the model of consent for organ donation. The issue is of such importance and any change to the current system would be so radical that the Minister is firmly of the view that the public must be given a chance to have their say. For this reason, as I have said already, the Minister has asked me to acknowledge the service done by Senator Quinn in initiating his Bill and starting off the public debate. That in itself underlines the Minister’s interest in and awareness of Senator Quinn’s aims. Whichever model is chosen, the Minister and her officials are determined to provide a statutory basis for the donation process to support and protect the altruism of organ donors and their families, together with staff working in transplantation services, and to promote and increase organ donation.
I have already referred to the further option of mandated choice, sometimes referred to as required consent, whereby individuals must be asked at a specified point — such as when applying for a driving licence or making tax returns — to decide and record their position on donation of their organs after death. Under certain circumstances the individual, or where appropriate their next of kin, may also be asked to decide on this matter during a hospital stay. The mandated choice model operates in some parts of the United States and elements of the model are being implemented in other jurisdictions in various forms. The Minister is of the view that if the opt-in model is the one finally chosen, the option of combining this model with elements of mandated choice would provide a very useful adjunct to transplantation services in promoting donation and increasing the number of donated organs and, ultimately, the number of lives saved.
There is another feature of the Minister’s proposals that I wish to bring to the attention of the Seanad. In Ireland the current position is that when a person has indicated his or her willingness to donate organs by carrying an organ donor card, or when the individual’s wishes are noted on a driving licence, the consent of the next of kin is always sought and the wishes of the next of kin, in effect, override those of the deceased. The public consultation conducted last year by the Department supports a move to change this to give legal precedence to the expressed wishes of the deceased. As with the opt-out system, no one will force a hospital to accept an individual’s organs if doing so will cause significant added pain to a grieving family. Nevertheless, the Minister believes that giving legal status to the stated wishes of the organ donor will encourage a change in mindset so that the donation of organs is regarded as the norm rather than the exception.
I will outline some other elements of the Minister’s legislation. The policy context behind the proposals lies in the discovery that post mortems had been performed and organs retained without permission, as documented by Dr. Deirdre Madden in her report into post mortem practice and procedures. A primary purpose of the Bill is to implement the key recommendation of the Madden report that no hospital post mortem examination should be carried out and no tissue retained for any purpose whatsoever without authorisation. I do not believe Senator Quinn had that specific area in mind, but I mention it for the purpose of full debate. This is perhaps the only element of Senator Quinn’s Bill on which the Senator and the Minister are in disagreement. If I am reading it correctly, it seems the Senator’s Bill as drafted would introduce a system of presumed consent for all matters relating to human tissue, including post mortem examination and retention of organs. Following the traumatic discoveries in recent years which gave rise to the post mortem inquiry, the Minister does not believe this move would be in keeping with the recommendations of the Madden report or the wishes of the families affected by organ retention, and her proposals are in fact diametrically different from the Senator’s in this regard. The Minister proposes that consent or authorisation will be the defining principle underpinning any of the specified activities involving human tissue, those being post mortem examination, anatomical examination, public display, transplantation, research, or the import or export of human tissue from deceased donors.
An important aspect of the Minister’s human tissue Bill is the inclusion of provisions for consent to retention of human tissue once the coroner has concluded his or her investigations. These provisions will complement the Coroners Act 1962 and the provisions in the Coroners Bill 2007 which awaits Committee Stage in the Seanad.
The Bill sponsored by the Senator contains many useful elements and certainly is heading in the right direction. On the issue of consent for post mortem examination and organ retention, the Senator, in his desire to bring forward proposals to support transplantation, may not have taken into account the effects his proposals for an opt-out consent model would have on post mortem examination and related activities. I am sure the Senator and I would not find it too difficult to reach agreement on this issue. I would go as far as to say I could not see Senator Quinn and the Minister having any difficulty in sorting out this aspect of the legislation. With regard to organ donation, the principal area in which the Minister’s proposals may — I emphasise the word “may”— differ from Senator Quinn’s is the eventual choice of model of consent. As I have explained, the Minister is not against the presumed consent model advocated by Senator Quinn, but feels there must be public debate before such a fundamental change is made to current practice. The case for the operational benefits of the model needs to be proven and the input of the Attorney General is required.
One area in which the Minister’s proposals go further than those of Senator Quinn is that of regulation. The Senator’s Bill does not propose any formal regulation of the activities I have outlined, while the Minister sees this as an important element of the legislation. The Minister has given the matter some consideration and has reached the conclusion that the publication of national guidelines and codes of practice on post mortem procedures, while they will have a place in the new structures, are not sufficient on their own to ensure compliance and gain public confidence. Self-regulation would not be acceptable in the aftermath of the post mortem inquiry and in view of international evidence of similar practices in many other jurisdictions.
Primary legislation is the only route for introducing the necessary safeguards, and the introduction of regulation, together with penalties for wilful breach of that regulation, is a proportionate response to the difficulties that have arisen. The Minister’s aim is to develop regulatory structures that will be sufficient to address identified need without being overly restrictive or prescriptive with regard to clinical practice. She is supported in this by the recommendations of the Madden report on post mortem procedure and practice and the outcome of the preliminary public consultation conducted by the Department. I hope these measures, which are designed to support and protect tissue donors, bereaved families and health care professionals, will meet with the Senator’s support.
I thank Senator Quinn and his colleagues for affording me the opportunity to speak in the House this evening and for opening this most important debate. I look forward to Senators’ support for the Minister’s proposals on human tissue matters in the coming months. The Minister supports the outline of the Senator’s suggestions and I hope agreement will be reached in the near future on this important Bill.
Senator David Norris: I welcome the Minister of State, Deputy Moloney, to the House and I welcome his useful review of the situation. I also very emphatically welcome the clear indication he gave of Government support for the general principles behind Senator Quinn’s Bill. I compliment Senator Quinn on his initiative in producing this legislation. It is no easy matter to produce a Bill. This is a very important area and one in which the advised view of the Seanad can be useful. It is also an area of some little delicacy in certain aspects.
My brain is somewhere over the Mediterranean because I have just come back from Cyprus by a very circuitous route. I put that on the record partly because I am rambling but also because in reviewing the literature I could not help but notice that, appropriately enough, it was a Cypriot European health Commissioner, Markos Kyprianou, who launched a significant report in this area in 2007. Even a small and fairly remote country such as Cyprus, which is still very much an agricultural community, has, through the human experience of its people, witnessed the need for action in this area. One of the things that moved me about what Senator Quinn said — I did not actually hear it, but I read his script, which he kindly supplied me with about half an hour ago — was the story of Mr. David Ryan. No one could fail to be moved by the way in which Senator Quinn put a human face on this matter. Few of us who have not been placed in this situation could possibly comprehend the agony of being on a waiting list and waiting for a tragedy to occur to another family in order that that person might continue his or her life. I do not frequently concur with the views expressed by His Holiness Pope Benedict XVI, but I am glad to say — I am sure it will go to Senator Quinn’s heart — on this occasion I can. Recently the Pope indicated that he had a donor card. He regards it “an act of human love” to give life to somebody after one’s own death. It need not necessarily even be life. It could be the gift of proper eyesight, proper functioning in other areas or improved functioning.
Among the areas the Minister of State reviewed was the question of opt-in, opt-out and the third option which is mandated choice. This is one favoured by the British Royal College of Physicians. Under that option legislation would be passed that decisions would be required by law to indicate before death a person’s position. That affects an entire range of areas. In this country where we do not have a mandated choice or an opt-out situation, a person could be killed tragically and that person may have wanted his or her organs to be donated, but the views of the family take precedence. I am not sure that is wise. While the sensitivity of the grieving family must be considered, I am certain that in a case where a person has clearly indicated he or she wants his or her organs to be used then that should have legal precedence. I welcome that the Minister of State has indicated this is what the Government would envisage subsequent to the passage of legislation.
We must also take into account the Madden report. I must say some of the communications I have received from Parents for Justice seem to have a slightly shrill tone, including suggesting that Senator Quinn should go back to the dictionary for a definition of the word, which is a kind of debating point. I am not sure it does its case any good by making this kind of point, although, of course, I have not had, nor am I likely to have, the experience of being a parent or a bereaved parent. I can understand that feelings may very well be exacerbated in such a situation. However, I have known a number of people who have had transplants. It came as an enormous surprise to me that the late dean of Christ Church was one. In speaking to him on one occasion I was quite unaware that he had received a heart transplant. For someone of my generation it is astonishing that medical science has progressed to this extent.
I note in his contribution, which I heard, Senator O’Toole used the word “harvesting” of organs. The Senator used the term in the neutral sense. However, in the wider global political spectrum the Senator would be the very person who would be concerned about the word “harvesting” because he and I were among those who raised the question of the Chinese Government detaining Falun Gong prisoners and using them as live organ banks so that they could be killed to order and their organs harvested. It is reasonable to include in this important debate from a humanitarian point of view our continued revulsion of using human beings as a kind of organ bank.
In the neighbouring island of Britain there was a campaign sponsored by The Observer newspaper — I am not sure if other colleagues have referred to it. It is interesting that the overwhelming number of Members of Parliament surveyed were in favour of precisely the type of legislation Senator Quinn has urged upon the House this evening. They were supported by a very significant range of professional bodies. The British Medical Association, the Royal College of Surgeons and the Royal College of Pathologists all came out in favour of the opt-out approach. That is very important because, as may well have been said, we must face the fact that ten people every day in the European Union die for lack of organ transplant availability.
In his speech the Minister of State referred to Spain. I wish he had been more specific. He simply said something to the effect that although Spain has a very high proportion of organ donors, the originator of the opt-out scheme was not convinced that it was responsible. I would like to know more about that. I would like to know precisely what he said and precisely what factors the Minister of State believes were important. Were they education, a television and media campaign or something else? The figures are rather stark. Spain is the highest with 34.6 donations per 1 million people and the lowest is Romania with 0.5 donations per 1 million. The Minister of State did not tell us where in this spectrum Ireland fits. It would be very useful for us to know.
We know there are a considerable number of these operations. In case nobody else has put them on the record I would like to do so. Since 1985 there have been 261 heart transplants up to March 2008. While that is by far the largest transplant number, I would have thought it is still comparatively small. Since 2005 there have been ten single-lung transplants and six double-lung transplants. Here again we come to the heart of the human matter. One of the most insidious diseases is cystic fibrosis. The only real relief that can be gained by a patient from this terrible disease is by a lung transplant. That there have been only ten single-lung transplants and six double-lung transplants since 2005 indicates a need for a great development here. Some 32 people are on transplant waiting lists for lungs. I again return to the appalling situation of people left waiting and not knowing whether they will have the possibility of life.
We must consider the matter in an overall European context. The Eurobarometer survey has indicated that 56% of European people are prepared to donate one of their organs to an organ donation service immediately after their deaths and probably would support this kind of legislation. We must have an informed debate and I congratulate Senator Quinn. There are risks, for example if proper procedures are not followed, of receiving into the body not just the health-giving organ, but also malignant organisms such as HIV infection, hepatitis C etc. There needs to be full and proper quality control and infection risk monitoring. Various types of bacteria, fungi, parasites and cancers can be transmitted. We have already referred to organ shortages and there is the question of organ trafficking, which apparently exists in Europe at a very low level and underneath the general radar.
We need to consider the legislation very carefully. I commend Senator Quinn on producing it. It would be useful to place it in a European context and review the debate that took place next door in the United Kingdom.
Acting Chairman (Senator Michael McCarthy): The Senator’s time has concluded.
Senator David Norris: I will come to the end of my sentence with the Acting Chairman’s permission.
Acting Chairman: In fact the Senator has gone over time. I have been extra lenient.
Senator David Norris: Not at all. We need to consider the matter in a European-wide context with a view to introducing an EU-wide donor card regime. I compliment Senator Quinn on his imaginative and very useful proposals here this evening.
Senator Lisa McDonald: I welcome the broad thrust of the Bill and fully acknowledge and support the enthusiasm and concern of Senator Quinn in bringing the legislation before the House. As he said, it is about saving lives. That tenet needs to be fully appreciated and respected.
Consent for the donation of organs for transplantation is a central issue. The opt-in or opt-out, or presumed consent versus the mandated choice, which have all been outlined by previous speakers, are the models that require public consultation and broader debate. Given the editorial in The Irish Times today that debate has commenced and is welcome. In view of the organ retention scandal of recent times, this is timely legislation and I urge the Minister for Health and Children, Deputy Harney, to bring forward the human tissue Bill as soon as possible. The Bill is about saving lives and for those on the transplant lists for various organs, including cystic fibrosis sufferers, this cannot happen soon enough. There is a need to move forward with the legislation as soon as possible.
I do not doubt that the presumed consent, the opt-in model, has meant that donation rates have risen in the countries that have adopted it. That financial resources have been saved due to the higher rate of organ donation is a welcome side effect.
The issue of specified activities, which Senator O’Toole dealt with in detail, involving human tissue, the post mortem examination, the anatomical examination, the public display, transplantation research, and import and export of human tissue from deceased donors may need to be looked at in the legislation that comes before the Oireachtas in that it may need to be separated. There would be widespread support for presumed consent for transplantation but I am not sure if there would be the same level of support for research. Perhaps those issues could be divided when drafting the Bill. All the issues need to be dealt with and legislation is required. In that regard the Minister of State, Deputy Moloney, stated that the report of Dr. Deirdre Madden on post mortem practice and procedures has led to key recommendations for bringing forward legislation in this area. That is what the Minister is looking at. On the issue of hospital post mortems and their regulation versus the coroner’s post mortem, the latter is separate and is being dealt with in the Coroners Bill which is before the Houses of the Oireachtas.
Senator O’Toole made the point in regard to the consent of the relatives and bringing them in on the process that if they consider what is being done is the donation of an organ as a gift that could help the healing and the grieving process and although the death of the deceased was untimely he or she has given the gift of life to somebody else. That is something the lobby groups should take into consideration.
We are concerned here with a huge cultural change but it is a step we need to take. When I was in university, during Fresher’s Week there were tables from which one picked up a donor card. I am a donor card carrier but if I was to meet an untimely death going home to Wexford tomorrow, the card is probably in another purse or somewhere in my papers.
As a practising solicitor for the past ten years I have noticed that increasing numbers of people want to write their will, despite the fact that until recently, rural people found it taboo to speak about death. People in towns and cities have a greater ability to deal with these issues. As a country we have been holding back on this issue and this has led to a series of intestasies.
Recently I have noticed that some people say they want to be cremated after death. It is their wish, not their relatives’ wish. The first point I make to such a person is to tell his or her next of kin and relatives because the practising solicitor may not hear of the person’s death until a week later when it would be too late. Cremation is something we are not used to in Ireland and for relatives it is a new departure. However, it is on the increase.
In writing their post death testamentary dispositions, that is, their wills, people are also saying they wish their organs to be donated. Again, that is too late. Legislation is needed to deal with this issue post haste after a crucial accident has taken the life of a loved one. We need to bring society along with us and in that regard the Minister is prudent in offering this aspect to the wider public for consultation. However, I fully acknowledge the thrust and tenet of Senator Quinn’s Bill and the work he has put into it. I agree with Senator Feeney’s request for the broad base of the Bill to be taken into consideration by the Minister when the legislation comes before the House. The last paragraph of The Irish Times editorial today reads:
Senator Michael McCarthy: I welcome the opportunity to contribute to this debate. I am one of those people who has always viewed organ donation as selfless and something we all aspire to doing, to ensure when we are gone we can benefit somebody else and give them the gift of live. Unfortunately, I do not have a donor card. When I see the advertisement it goes to the back of my mind because we all think we will live forever. As Senator McDonald has said, there is a certain finality about making those decisions and entering into that thought process where one has decided what to do.
It is good that we are debating this issue in the House. I commend Senator Quinn on bringing the Bill before the House because, while making us think about organ donation and transplantation, it puts this issue in the spotlight. By debating it here we will raise public awareness not only in the Houses of the Oireachtas but among charities, health professionals and the media in general. That is worthwhile in itself.
While researching for the debate this afternoon, I noticed that 69% of people are willing to donate organs, yet only 29% carry donor cards. That statistic speaks volumes about the whole area of transplantation and the lack of cognisance given to it.
I accept that the Bill aims to put a legislative framework in place. Having spent the last hour in the Chair I have noticed there is a broad school of opinion in the House that accepts the tenet of the Bill and agrees with its broad thrust. I hope that whatever decision is reached this evening will lead to a legislative framework to allow the aspirations contained in Senator Quinn’s Bill to become law. I know the issue is very difficult for people but it is a practical one. The manner in which we try to switch from the current situation to permit that opt-out will speak volumes. I am one of those people who has often thought about the matter but has never got around to doing anything about it. We must be aware of the many situations where people have benefited from organ transplantation and must develop a legislative framework for it.
The opt-out, or presumed consent model of organ donation, already exists successfully in Austria, Spain and France. In those countries if a person dies who is a suitable donor, his or her organs can be transplanted to save another person’s life. We must remind ourselves why we are debating this Bill. Its objective is to save lives. I agree to a system whereby people can opt out or register as a non-donor and am open to suggestions that this might be managed by Internet, by the carrying of a non-donor card or by stamping the back of a licence.
While researching this afternoon I came across a worthwhile quotation, one that we should all remember. James Nolan, an Irish kidney transplant recipient said: “Please don’t bring your organs to heaven because heaven knows we need them here on earth”. That was said by a person who has already benefitted from organ transplantation.
There is a broad thrust of support for what Senator Quinn has tried to do. He has certainly put the issue into the spotlight and it has been followed up by various organs in the media, no pun intended. The editorial in The Irish Times today touched on the matter. As legislators, we have all been made to think about the subject. I urge the Minister of State to carry back to the Minister for Health and Children, Deputy Mary Harney, the news that this proposal has been broadly welcomed in this House, although we might not agree on the finer details. There is an onus upon us, as legislators, to ensure we put a framework in place to allow this Bill to be enacted.
Senator Déirdre de Búrca: I congratulate Senator Quinn on his Human Body Organs and Human Tissue Bill 2008. He has taken the opportunity in Private Members’ business to advance draft legislation in this House to prompt the Government to accelerate the preparation and enactment of legislation in this area. Judging from other speakers in the House today there is a widespread consensus that such legislation is badly needed. It is to be hoped that the effect of the introduction of Senator Quinn’s draft legislation will be to ensure the Government introduces as quickly as possible the necessary legislation in this area.
I congratulate the Senator again because this is bold legislation. It proposes a fundamental change to a system with a presumption in favour of consent to the donation of organs and body parts unless that consent is expressly withheld.
I agree with the sentiments expressed earlier by the Minister of State. Based on practice in Spain and elsewhere, it appears that presumption in favour of consent can and does lead to a much greater level of availability of organs for transplantation. Such a fundamental change would require full consultation with the public and for that reason I withhold my immediate support for the proposition. I support what the Minister of State said about public consultation and having a level of support for that fundamental change. It is a very sensitive area and speakers have highlighted this point earlier. I do not believe it would be fair to introduce legislation containing such a fundamental change without the support of the public. Following a public consultation period, I would be happy, and I believe the Green Party would be happy, to consider legislative change to presumption in favour of consent.
The issue of consent is obviously central to this legislation. In this context consent refers in particular to the removal, retention and disposal of human body organs and human tissue. There have been scandals in this country, specifically the organ retention debacle in which hospitals retained organs of deceased children following post mortems and without the consent of their immediate families. The group, Parents for Justice, has done great work in raising awareness of this issue. The Government set up a non-statutory inquiry, the Dunne inquiry, which was followed by the Madden report in 2006 that outlined a series of recommendations.
Reasons for the removal, retention and disposal of organs and human tissue can vary, ranging from diagnostic purposes, teaching and research and transplantation. What is very helpful in Senator Quinn’s draft legislation is the clarification dealing with consent being for “permitted” activities for scheduled purposes. Those kinds of safeguards would be necessary in any legislation because harvesting human organs and tissue is a sensitive issue. Harvesting happens at a time when, typically, people have been recently bereaved and are obviously very emotional and distressed. The circumstances of the death of the deceased person may have been very tragic. It is a difficult time to try to establish consent for a procedure as sensitive as this one and we must have adequate safeguards in place. There is growing public concern about possible trafficking in human body parts and any legislation we may introduce in this area must put safeguards in place to ensure this cannot occur. That would be the greatest fear of many relatives of deceased adults and children. It is possible to imagine a system emerging in which human body parts might be trafficked and we must be very careful that the legislation allows no scope for this to happen.
This Bill touches on a number of important issues, one being the consent of children. It was important to address this issue but I am not sure the Bill has fully resolved some of the dilemmas that would arise in obtaining the consent of children to the harvesting or use of their organs after their death. A young teenager is in a much better position to give informed consent to procedures such as this while a very young child is not. Perhaps some kind of differentiation between categories of children, based on age, might be useful. I would be more comfortable with that.
A helpful part of the Bill concerns qualifying relationships in the context of withholding consent by children and adults. The Bill raises the need for a much greater level of public awareness and education in the area of organ removal and retention. The public must understand to what uses organs are put and there must be much clearer explanation as to the kind of medical research carried out and what some of its possible benefits might be.
We need improved medical education and training in hospitals with a much greater emphasis on communications skills and on the legal and technical issues. Training must be given to personnel in the area of post mortems. One of the reasons the system in Spain is so successful is that there are adequate support services in hospitals for families who find themselves in a position where their consent might be required. We must ensure that if we are to introduce legislation in this area, resources are made available to ensure that proper supports are available.
The issue of disposal of retained organs is very important. The period of retention can often be quite long and we should have very clear protocols around this. The principle of observing the wishes of the family concerning the disposal of organs, and how they should be disposed of, should be established very clearly in any new legislation. There have been difficulties in the past where families have discovered that their children’s organs may have been incinerated in the same way that general hospital waste is incinerated. Very often the wishes of families are that these organs would be re-buried with the child’s body. While it would be important to establish this principle in any legislation, I wish to conclude by again congratulating Senator Quinn on a timely and welcome item of legislation and by expressing the hope that the Government will follow up with its own legislation as quickly as possible, based on a full public consultation process.
Senator Rónán Mullen: I welcome the Minister of State to the House and commend Senator Quinn on bringing forward for debate this timely and worthwhile issue in the form of his Bill. As other speakers have noted, this is a deeply sensitive and important issue. It was great to hear the different speakers speak from their own experiences and with reference to stories concerning their families, friends and loved ones. This issue touches most people in our society because one either has been personally affected by it or knows someone who has had the benefit of an organ transplant or has a loved one who was a donor. I also wish to thank Senator Quinn for having organised an excellent briefing session on the issue yesterday. Sadly, people are extremely busy at present as a great deal is happening and it was a pity that more people did not attend it because it was a fine briefing session. It was highly informative regarding the intent behind the Bill and in taking Members through its specifics.
I come to this debate as one who perceives it as an important starting point. I echo fully Senator de Búrca’s comments on the need for public consultation before arriving at definitive legislation on this subject. Whereas I may have some concerns about some aspects of the Bill, which I intend to outline to the House, I do not do so in an adversarial sense, but rather in the spirit of promoting a full debate on the complex and sensitive issues this change of policy would imply. While a number of issues are of particular concern, I hope the relevant Department will consider today’s debate and take it forward, as Senator de Búrca has proposed, to a wider consultation that will lead to legislation in this important area.
I will make a number of points. The essential proposal in Senator Quinn’s Bill is that we would change from an opt-out principle to one of opting-in, which in general would be highly desirable. The idea that one would presume that someone would consent to have his or her organs used, transplanted and given to another person to save another life in the event of his or her death, strikes me as one which extols the human virtue of solidarity with other people. It is right and proper that as a society, we would presume a generous intent on the part of people when such tragic circumstances arise as to give rise to the possibility of the donation of an organ.
However, Members must think carefully about what the Constitution requires and perhaps what natural justice requires in respect of what should happen when the potential donor is a child and what should happen when a child has not indicated consent one way or another. At the briefing yesterday, I was given to understand that Senator Quinn would propose that when a child had not given a view on whether there should be a donation in the event of his or her death and when parents had not recorded an opt-out and when a parent or next of kin was not present in the event of a tragic accident or so on, it might then be possible for professionals to proceed in an orderly and regulated way to facilitate the transplant. Were that the case, I would be concerned. This must be discussed in greater detail to decide who precisely should be consulted and perhaps whether the presumption should be of an opt-out, rather than an opt-in, unless parents are present to give permission for it in such an event. However, I recognise there are different sides to that argument.
A question that I find fascinating and which I believe will be highly important is that of when death occurs. While I am aware this matter is not dealt with in the Bill, it is a central question, the resolution of which hangs over the entire debate. An interesting debate is taking place on the question of what constitutes death and whether what has been termed brain death actually constitutes death. This undoubtedly is connected with the fact that many cases have occurred in which people who were in what might be called a vegetative state, a semi-comatose or a fully comatose state, even for long periods of time, have made a recovery.
There have been some recent publications in this regard and I wish to draw Members’ attention to one in particular. I refer to an Italian work, Finis Vitae: Is Brain Death Still Life?, which was published in English by the Council for Research in 2006. The Council for Research is not an ecclesiastical body although it certainly receives contributions from Catholic church sources in Italy. It is interesting to note that the definition of brain death which has been embraced in medicine over the last 40 years has been accepted by the church. Its viewpoint in this area should coincide with those who come from a more secular perspective because there no great dogmatic principle is in dispute and the idea that life is sacred and that one should not take innocent life is a principle with which most civilised people will agree.
What is interesting is that people are beginning to question whether what has been called brain death is or can constitute death. Professor Roberto de Mattei, who contributed to the aforementioned book, discussed the provenance of the notion of brain death. In 1967, after the first heart transplant was successfully performed in South Africa, questions were raised about how to ethically acquire organs for transplant, given the short window of time in which they must be transplanted. The problem arose that if a person was near death but not yet dead and if such a person was killed for his or her organs, this obviously would constitute the killing of an innocent person. There were two options, that is, to change the moral law making it licit to kill the innocent or to change the criteria for ascertaining death. This is what led to the choosing of what might be called by some a utilitarian justification. Since lives would be saved, the social construction of brain death was created and developed to meet the need of transplanters during the procedures’ developmental stages.
The first article on brain death appeared in 1968 in the Journal of the American Medical Association and was entitled “A definition of irreversible coma”. Dr. Paul Byrne of St. Vincent’s Medical Center, Ohio, is a neonatologist and was another contributor to Finis Vitae: Is Brain Death Still Life?. He was invited by the Pontifical Academy of Sciences in February 2005 to speak on the issue and stated that brain death is not true death but a fiction concocted essentially to facilitate transplantation. These points represent some of the emerging debate. A recent publication in the New England Journal of Medicine makes the same point, albeit from the perspective of people who support transplantation. They state it is not sensible to locate the ethical basis for transplantation on the idea that brain death constitutes death, because they are of the view it does not. Where does that leave one?
I only make this point as someone whose heart is with the concept of presumed consent. Those who disagree with me might suggest taking my heart and leaving the rest. However, from that perspective, I suggest that were there a possibility that what is called brain death might not be death and were there a possibility of recovery, it might have implications for the concept of presumed consent. Were that to be the case, it might be better not to presume consent and to rely on the principle that greater love than this——
An Cathaoirleach: The Senator’s time has expired.
Senator Rónán Mullen: I will conclude.
An Cathaoirleach: I must call the next speaker.
Senator Rónán Mullen: ——no man hath or no person has. In other words, in the event that brain death is arrived at, a person could opt to allow his or her organs to be used, even if there was a slight possibility that he or she might survive. I only offer this points by way of a contribution to the debate. I thank the Cathaoirleach for putting up with me and I again commend Senator Quinn on bringing forward this highly important issue——
An Cathaoirleach: My hands are tied in respect of the time.
Senator Rónán Mullen: ——and look forward to an extensive consultation process.
Senator Mark Daly: I welcome the chance to speak in this worthy debate because a time when we stand in this House with the opportunity to help create legislation that can actually save lives is all too rare. I thank Senator Quinn for his contribution in highlighting the issue and I have no doubt his actions in raising this matter will form part of the Government Bill being proposed.
I am certain of one thing in tonight’s discussion, that the debate on the issue of organ donation is absolutely necessary. Beyond that point I am here to listen and learn from the opinions and research of my esteemed colleagues and offer my own views on the issue. I know the number of organ donations in the country must definitely increase and would like to consider the various ways this can be achieved.
One of the criticisms of presumed consent is the impression it is part of a nanny state operation in that it takes the right of the person to consider and is involved in the decision to bestow the gift of life to another person. To assume one would do this belittles the act and takes for granted what a miracle organ donation is. If the harvesting of organs becomes as routine as any other procedure, grieving relatives can feel their loved ones, even before their passing, are viewed as vessels carrying organs to be removed and can find this grotesque and difficult to allow in this stage of grief. Studies have found that families are more likely to rebel if their role in the decision making process is removed.
It may be far more effective to encourage the discussion of organ donation with families and loved ones to normalise the process for everyone involved. Public awareness campaigns and facilitation of discussion in schools, colleges and work places could have the same effect as introducing presumed consent.
A survey by Spanish researchers found that of 200 families that declined to have their relatives’ organs removed, 78% changed their mind after the process was explained in detail. Very few organ donation awareness campaigns have concentrated on encouraging an individual to communicate about organ donation with family members. As organ donation does not take place without the permission of a person’s next of kin, Government agencies and organ procurement organisations must target communication with family members as a primary objective of organ donation campaigns.
A 2002 US study noted that because the quality of discussions between the potential donor and his or her family will depend on how well the donor is able to address vital issues regarding donation, it is recommended that campaigns seeking to promote communication between family members about organ donation must simultaneously seek to increase knowledge, debunk myths, and bolster positive attitudes about donation.
The United Network for Organ Sharing’s ethics committee has written that: “Intrinsic to the present approach to organ donation is the autonomy of each person to decide.” Autonomy, a paramount value underlying much of ethics and political philosophy, means that each individual has a right to choose and has final say over his or her own body. In this light it is supposed that a perfect organ transplant system would satisfy three criteria: first, that every person would make a fully informed choice about whether to donate; second, that choice would be communicated to the surgical team; and, third, that the surgical team would act accordingly.
Clearly, under presumed consent the first principle of every person making a fully informed choice is compromised. Only those who go to the trouble of educating themselves and then either opting in or out of the system have made any decision. However, under the current system, often both the second and third criteria for the perfect organ transplant are removed. In Ireland today a person can expressly indicate by carrying a donor card or ticking his or her driving licence that he or she would like to donate organs in the event of demise but have this wish overturned by relatives who are not aware of the dying person’s convictions or are not educated on the process of organ donation. The tendency to follow this trend is so prevalent that one could die with an organ donor card in every pocket, and another one pasted on one’s forehead, and the family would still be able to overturn these wishes.
This challenge to organ donation occurs because a person’s decision to carry a donor card is not legally binding. It is only considered an indication of their intention. Consequently, a once competent person’s wishes, which are known either orally or in writing, can be overruled by the next of kin. If the organ donor card becomes a legally binding will, and this is accompanied by a massive public opinion campaign to sign one, I believe the situation would improve. I am not sure this is the route we should go down. This option is known as first person consent. Under this system additional witnesses or family consent is no longer required to carry out wishes in the event of death. In the event a person has not had the option to join the first person consent registry or is under the age of 18, next of kin will still be approached for consent.
A properly signed declaration, such as the back of a driving licence or an organ donor card, is a legal document under the Uniform Anatomic Gift Act in the US and is effective to authorise donation in every part of that country. Moreover, the relevant laws specify that consent of the donor’s relatives is not needed in such circumstances. The relatives do not have legal authority to undo the donor’s wishes.
Whereas the family’s permission may no longer be required under first person consent, effective systems will still include relatives in the process by explaining the donation process to the donor’s family, answering questions and providing additional support. The family will be asked for the donor’s medical and social history to help determine which organs or tissues may be transplanted. Family members are also asked whether they wish to receive follow-up information, such as general information about organ or tissue transplant recipients.
I commend Senator Mullen on offering his heart to us and much of what we have discussed has already been covered. Spain has been mentioned time and again but it is not the presumed consent model that works there. That country has an effective system with transplant specialists and counsellors who can speak to families and educate them in their supreme hour of grief.
I ask that we begin by having people signing the back of their driving licence and having the information pooled in Clare. We have 1,550 people on dialysis in this country, which costs a staggering €100,000 per annum per person. If we spent that money on an effective organ donation system, it would be money well spent. Lives would be more fulfilled and other lives would be saved.
In my own county, it is somewhat encouraging to note there were nine times more organ donations in Kerry General Hospital than in a major hospital in Cork, and 18 people’s lives were transformed forever by the actions of the Kerry hospital. It is the staff in the hospital who took the initiative, went to the families and looked for organs from the grieving families. In the Cork case, only two kidneys have been donated from that hospital in ten years.
Ultimately, we are failing because as legislators we have not put a system in place. To say we are tied at the bottom with Malta is not a record we should have this time next year.
We will not vote on this Bill but as I indicated to Senator Quinn a Bill is coming. His input from the outline of this Bill has started a debate that will end in lives being saved. Even if what he started today saves one life, I remind him that the Bible states that if a man saves one life, he saves the world entire. I thank Senator Quinn.
Senator Feargal Quinn: I welcome the Minister of State, Deputy Wallace. I found this debate very useful and Senator Daly’s last words were very close to what I would have said myself.
The aim in introducing this Bill on behalf of the Independent Senators was to achieve shorter waiting lists and fewer deaths. I believe the Minister of State’s comments that this Bill contains many useful elements and is heading in the right direction. If that is to be the start, so be it. I really appreciate the amount of effort put in by so many people today. I had taken notes and was going to comment on each of them but I will not attempt to do so.
I am heartened by the overall experience because the Minister of State spoke of coming together to further discuss and have public consultation. Those were the words of the Minister for Health and Children, Deputy Harney, as well. I believe that is what the objective is — to further this on that basis.
I appreciate all the effort that has been put in. I have learned two things from this process. One is that Pope Benedict XVI carries a donor card, which I did not know. Mr. Mark Murphy, who is in the Visitors Gallery, has responsibility for this area. I do not know if he gave the donor card to the Pope but I am delighted to know he has it. I learned the other fact yesterday, and it is that one of the reasons the United States has more donations than Canada is because of the number of gunshot deaths that occur there. It is a reminder of the things we learn when we introduce legislation.
I am happy to adjourn this debate because of what the Minister of State said. I believe the Minister will achieve what she and I are both setting out to do.
Sitting suspended at 5.55 p.m. and resumed at 6 p.m.
Senator Donie Cassidy: I thank my colleagues for their support while the House awaits legislation from the Dáil. I propose an amendment to the Order of Business to suspend the sitting and resume at 11 p.m. to consider all Stages of the Credit Institutions (Financial Support) Bill 2008.
An Cathaoirleach: Is that agreed?
Senator Maurice Cummins: We oppose the proposed amendment to the Order of Business. Why is it necessary to have this Bill passed and for us to debate it from 11 p.m. until God knows what time?
Senator Paul Coghlan: Hear, hear.
Senator Maurice Cummins: As my colleagues have stated, there is no guarantee whatsoever that this Bill will have been passed by the Dáil at 11 p.m. We will be running around like eejits and come in here at 11 p.m. only to find that the Bill has not been passed by the Dáil. What is the urgency of it? A guarantee has been given. There is no need to rush the legislation. I suggest we deal with it as the first business in the morning. If we must meet earlier, even at 9.30 a.m. or before that, let us deal with it then. Let us be realistic about it, rather than resume at 11 p.m. only to find the Bill has not been concluded in the Dáil. It will not be concluded in the Dáil by 11 p.m. The Members there are still debating amendment No. 1. It is unrealistic to suggest that the Bill will be available for us to deal with it at 11 p.m. Let us be realistic and deal with the Bill in the morning. I suggest that the Leader accepts our viewpoint on this matter.
Senator Michael McCarthy: The former Tánaiste and Minister for Health and Children said two weeks ago that realism is important in politics. I cannot see this Bill being debated in this House tonight. Given the amount of time the Dáil has spent on amendment No. 1 and as the debate has been adjourned until 8.30, I do not believe it will be passed by that House tonight.
The Leader of the House has been helpful and obliging in the past in terms of debates and facilitating various requests by Members. To be fair and to extend the co-operation and spirit of goodwill the Opposition has shown to the Government in the other House, the Leader needs to seriously consider the proposal put before him.
Senator Dominic Hannigan: I will not repeat the arguments made by my two colleagues but I ask the Leader to consider this point. The same situation arose last night and we had people in place, if needed. Some of them had even cancelled appointments. They were willing to do so because this is a very serious issue. Will we debate the Bill at 11 p.m. after the Dáil has concluded its consideration of it? I do not believe we will and, I suspect, the Leader does not believe we will either.
Senator Shane Ross: I agree with my colleagues. I know the Leader’s hands are tied and that this is not a decision he makes. He has the difficult task of coming in here to tell us this because it is totally unreasonable. I would like him to answer a question. Could we be given a reason for this extraordinary request?
Senator Paul Coghlan: Hear, hear.
Senator Shane Ross: The Leader just stood up and said he proposed we adjourn until 11 p.m. Why? Why in the name of God can we not consider this Bill properly when we meet tomorrow morning, or we could meet earlier tomorrow, or on Friday or Saturday? To ask us to go away for five hours for no reason and to come back and debate this Bill, when it probably will not be ready in any event, is utterly unreasonable.
I wonder what is going on behind the scenes. I wonder is a bank in trouble? What is happening? Must this Bill be put through before tomorrow morning because the European Commission is kicking up an awful fuss and it will have us in the courts in the morning? We need a reason for this. This is very important and the Leader knows perfectly well that the Bill will not be properly considered, with due consideration, at 11 p.m. We will not table the amendments required and we will not be fit enough to consider it properly, but we would be tomorrow and the Bill may not even be ready by then.
We are being asked to adjourn for five hours and to sit late. This is emergency legislation and it was postponed until this morning. Why it cannot be considered properly by the Dáil and then considered by us, I do not know. I demand that we be given a reason for this. We will divide the House on this. We may divide the House on every amendment and section of the Bill if the Leader behaves like this. Two people can play this game. We deserve the respect we have earned in this House, if we are to give this proper consideration.
Senator Jerry Buttimer: Hear, hear.
Senator Shane Ross: We should not be treated like cattle and told the House will be adjourned with no reason given, that we should just get on with it and that we will resume at 11 p.m. It is insulting.
Senator Paul Coghlan: I support what has been said by my colleagues. I, too, respect the Leader on this matter. He has come here on instructions, but sadly he has come here without reasoning, as Senator Ross has explained. All of us, as practical parliamentarians, know the position, given that the other House is still dealing with amendment No. 1 of section 1 of the Bill, to which the Minister for Finance has not yet responded, and given that debate on the Bill is to resume at 8.30 p.m. The Minister for Finance is taking advice on the potential challenge from the banks that it is proposed, as of now, to exclude and, presumably, they may have to be included. I have no doubt the Government will also have its own amendments in mind, which are being considered by officials and its Members, as we speak, and as, I suspect, the Leader knows.
I, therefore, respectfully ask the Leader, if he can, to take some further immediate instruction. What is proposed does not make sense because, as Senator Cummins pointed out, the guarantee is in place. The public, the banks and everyone knows that both Houses are dealing with the matter as expeditiously as possible, giving it all due care and attention. Many amendments will be also tabled by Members in this House. Therefore, deferring consideration of it until 8.30 a.m. or 9.30 a.m. tomorrow, with all due respect, would not make any difference to the outside world who know of our overall intentions. The Government has given a clear lead on the matter, and we have responded wisely. I ask the Leader, with respect, that rather than divide the House — if he requires a sos for a few minutes, I am sure he would have the Cathaoirleach’s indulgence — to defer the taking of this Bill until tomorrow morning and we will all be back here with fresh minds to deal with it more expeditiously.
Senator Paschal Donohoe: I concur with what all my colleagues have said. I wish to put forward a brief and practical suggestion. The time of the House tomorrow has been set aside to consider the Harbours (Amendment) Bill 2008, which is detailed administrative legislation covering the implementation of a policy that was brought forward in 2005. There is no reason that Bill cannot be taken next week or next month as there is no urgency about it. The Leader might consider deferring the taking of that Bill and use the time available to deal with this far more important legislation.
Senator Eugene Regan: The Leader may be taken aback by the strength of feeling on this side of the House on the issue and perhaps he might suspend the sitting for 15 minutes to afford him some time to reconsider the matter. The suggestions that have been made are valid. As has been said on numerous occasions in the past 48 hours, we are anxious to get this right and to be constructive. In the context, I ask the Leader to take on board what has been suggested.
An Cathaoirleach: Does the Leader wish to reply?
Senator Donie Cassidy: Yes. I will support the call by Senator Regan to take further instructions and I propose we adjourn the sitting for 15 minutes.
An Cathaoirleach: We will adjourn until 6.35 p.m. Is that agreed? Agreed.
Sitting suspended at 6.20 p.m. and resumed at 6.35 p.m.
An Cathaoirleach: I call the Leader.
Senator Donie Cassidy: I again thank Members for their co-operation. As they are aware, I am obliged to take instruction from the Government Chief Whip in respect of matters relating to Government business. In that context, I propose an amendment to the Order of Business to suspend the sitting until 10 p.m. We can review the situation at that stage but I hope the Bill will be available by then.
An Cathaoirleach: Is that agreed?
Senator Paul Coghlan: With respect——
An Cathaoirleach: Please Senator——
Senator Maurice Cummins: The Ceann Comhairle stated on the evening news that he does not expect the Bill to be passed by the Dáil until after midnight.
Senator Paul Coghlan: Yes.
Senator Maurice Cummins: I must question the wisdom of asking Members to return to the House at 10 p.m. Why is it necessary to pass the Bill by tomorrow morning? Many Members have asked that question and, at this stage, we deserve an answer.
Senator Alex White: I agree with Senator Cummins. This Bill started out as emergency legislation but it is quickly losing its tenor as such given what happened yesterday. It is no longer emergency legislation. The Government has made a decision and is now looking to both Houses to pass the legislation.
On the 10 p.m. issue, Committee Stage of the Bill will resume in the other House at 8.30 p.m. and there are 28 amendments. I venture to suggest that the chances of the Bill being ready at 10 p.m. are zero.
Senator Frances Fitzgerald: The Government’s timetable on this legislation has been chaotic from the start and this is another example of it. It is very clear the Bill will not be finished in the Dáil by 10 p.m. so I do not know why this House is being recalled at that time. What is the reason for the rush? This looks quite chaotic and that sends a much worse message than the Government saying it wants the legislation through by the end of the week which would be a much more coherent message to send instead of all this stopping and starting.
Senator Shane Ross: I repeat what I said earlier that I would be very happy to extend goodwill to, and to co-operate with, the Leader and the Government on this issue if I was given the simple reason this is happening and why we cannot consider the Bill tomorrow, the day after that or whenever. We have been given no reason and we are being insulted by this rush. If we do not get a reason for the rush, we must be suspicious that something is happening about which we are not being told, which is possibly true. I oppose this suggestion and suggest we adjourn until tomorrow and consider the Bill then when it has gone through the Dáil.
Senator Liam Twomey: The way in which this legislation is being brought through the Houses of the Oireachtas is making Members look like incompetent idiots in the eyes of the public, which is looking at what we are doing. There are 27 amendments left in the Dáil. If they spent five minutes on each of those amendments, it would take until midnight. It has been on amendment No. 1 for four hours, so the chance of that legislation being finished in the Dáil by midnight is next to impossible because there is no guillotine.
We are deluding ourselves into thinking that we will be debating the Bill an hour and a half after the Committee Stage debate resumes in the Dáil. The 9 o’clock news will indicate that we cannot make up our minds when we want to start or finish the legislation which is considered so vital to the banking sector of this country. Let us be realistic, stop fooling ourselves and making eejits of ourselves in the eyes of the pubic and postpone the debate until the morning.
Senator Michael McCarthy: There are 28 amendments to the emergency Bill being debated in the Dáil which will not deal with it again until 8.30 p.m. Even if the Dáil rushed through amendments Nos. 1 to 28, it is highly unlikely that the Bill will be here before midnight. The Ceann Comhairle is a Deputy of 21 years’ standing and if he announced on the national airwaves that it is unlikely that the Bill will be completed in the Dáil before midnight, it is pointless bringing us back at 10 p.m. and even more pointless bringing us back at 11 p.m. because, realistically, it will be tomorrow morning before we get to the Bill.
Senator Paul Coghlan: There are 28 amendments to the Bill and the Dáil is still on amendment No. 1 to section 1 and the Minister has not yet responded. Unless, as Senator Ross said, the Leader knows something and an amendment to the Order of Business will be proposed in the Dáil at 8.30 p.m. to introduce a guillotine, I think what the Ceann Comhairle said on the national airwaves is right. We understand the debate is open-ended in the other House. Unless the Leader knows something we do not know in that regard, he is making us look ridiculous. He came into the House a quarter of an hour ago and proposed that we adjourn until 11 p.m. He has now amended that and has proposed we adjourn until 10 p.m. It makes no sense.
The Government has given a guarantee and the banks and the public know we are dealing with the matter as expeditiously as possible. We should stick to our guns and adjourn until tomorrow morning and come in as early as the Leader wishes.
Senator Eugene Regan: I would like the Leader to know that we are not trying to make life difficult for him but are trying to be constructive. Clearly, the legislation will not be dealt with in the Seanad before 12 a.m., so we are into tomorrow in any event. That is why it makes sense to leave it until tomorrow. As Senator Ross said, we should be given a reason the Leader chose this time. Perhaps that would clear up the matter.
Senator David Norris: I support what my colleagues said. This seems to be a fairly chaotic proceeding. I am not sure why the Bill must be dealt with this evening. If this is a really serious matter, then it deserves serious consideration, which we should give it.
As Senator Ross apparently said, and I am sorry I was not present to hear him, no good reason has been produced as to why this cannot wait until morning when we can consider it. The matter is unfolding all the time.
I was just having a cup a coffee and saw someone on British television say that there are fears that this could be breaching competition law, and perhaps other Members have averted to that. That is nonsense. I have said many times in the House that we in Ireland, in addition to people in Europe, have in many ways made a little tin god out of competition, the market and all these other shibboleths to the disadvantage of the ordinary citizen. As representatives of the ordinary citizens of Ireland, we should have an opportunity properly to discuss this important legislation.
The only way the Bill will be completed is by guillotining it. Perhaps we will see it at 12 a.m. but what type of reasonable discussion is there likely to be in this House at midnight or after midnight when the Bill has been already been guillotined in the Dáil?
Senator Jim Walsh: I have been impressed that most of the contributions in the Dáil have maintained a semblance of unity of purpose. Members of this House have been very responsible as well. Reference was made to the situation being chaotic but we must admit that we are living in really chaotic and turbulent times financially. No Seanad or Dáil in the history of the State has been confronted with the situation with which we are confronted. The Wall Street crash was confined to America. Looking at what is happening in America, its President and members of Congress have said their whole business and financial structure is at stake and it has come up with a rescue package.
I would prefer not to be here at 10 p.m. but we agreed to resume at 10.30 p.m. last night. I understand people saying they would like a reason but if there is a really good reason, I would expect we would not be told it, nor should we be.
Senator David Norris: Senator Walsh should explain that.
An Cathaoirleach: Senator Walsh, without interruption.
Senator Jim Walsh: We are dealing with a sensitive area which goes to the core of the future commercial and business life of this country. If those in authority, who obviously have access to all the necessary information, are making a judgment call, we should not try to second-guess that purely to hold the debate tomorrow rather than tonight. I appeal to Members that if that call is made——
Senator Jerry Buttimer: We do not know that.
Senator Jim Walsh: If it subsequently transpires that there was no good reason for this, Members can make complaints, which would be valid. However, as of now, we do not know the reason. We must trust those who are in positions of responsibility. The last thing one needs on an aeroplane if there is an engine problem is the person at the back dictating what should happen. We have pilots on the aeroplane, so let us trust them and move forward.
A reasonable suggestion has been made and perhaps at 10 p.m., the Leader will come back with some other information, depending on the update from the Dáil at that stage. Whether we come back at 10 p.m. is not an issue on which we should divide. The problem is far too serious.
Senator Jerry Buttimer: I deliberately avoided getting involved in this debate but Senator Walsh’s contribution and the Leader’s proposal are fast eroding the consensus on this side of the House which has behaved impeccably over the past 48 hours. It is time we received leadership on this issue from the Government side of the House because the problem is very simple. No information has been forthcoming and no reason has been given by Government as to why this Bill must be completed today rather than tomorrow. When we come here at 11 p.m. or midnight to debate the Bill, the Government will have the votes to carry it through, no matter what happens. I would not like to see the consensus eroded, but the behaviour of Government yesterday and thus far today is leaving a very poor taste on the Opposition side of the House. We are trying to be co-operative and not to be obstructionist, but we are not getting any help from the Government side. The Ceann Comhairle has expressed a different view from that given to us by the Leader. What are we at? The Leader is a much more experienced parliamentarian than I am, but I can do mathematics. It does not add up in terms of the timeframe. Will the Leader explain why the legislation has to be passed tonight?
Senator Alex White: On a point of order, if the debate in this House is to occur tonight, is there a rule or convention in place in respect of the timescale applying to the moving of amendments? I wish to signal now to colleagues that the Labour Party intends to move the 12 or 13 amendments that are being moved in the Dáil on Committee Stage in this House.
An Cathaoirleach: Amendments can be tabled in the Chamber.
Senator Donie Cassidy: I assure the House that I am and have been doing everything I can to get consensus. I will do all I can in that regard. I want the House to accept that I have been honest and truthful on this issue in the House. I have discussed Second Stage with leaders of the groups and we propose to have a three-hour Second Stage and then have a break to facilitate the tabling of amendments. We intend then to go through the various Stages as is normally the case in the House. As all colleagues know, I have never guillotined discussion on a Bill, neither during my time as Leader from 1997 to 2002 nor since I was privileged to be reappointed as Leader on 24 June last year. I am doing all I can to retain the consensus and harmonious working relationship we enjoy here together in as much as that is possible as parliamentarians. That is the reason I got agreement to bring forward by one hour the hour at which we shall reconvene.
Senator Alex White: There is no real basis for doing that.
Senator Joe O’Toole: The Leader will confirm that this side of the House has offered co-operation throughout this debate. I asked last night, this morning and possibly again this afternoon why the legislation has to go through in such a rush. We found out last night there was no need for it to go through last night and now, 24 hours later, we are asking the same question. If there is a reason in the national interest the Bill must go through tonight, no one on this side of the House will walk away.
In terms of the Leader’s good offices, we have had our arguments in the past but if he stands up and hand on heart says he cannot tell us the reason but he has been assured there is an important reason in the national interest for the Bill to go through tonight, we will discuss that. I have not heard that. It seems as if the Government just wants to get this pesky legislation out of the way and get it through the Seanad tonight. That is the message coming across to us.
I understand the Leader has been in contact with Government and that the Government is irritated by what is going on in the other House. I have listened to the debate there all afternoon and understand that Committee Stage is a series of Second Stage speeches there. That is their business. However, I get the impression from what the Leader has said that the Government intends to bring the legislation to a speedy conclusion in the other House. If that is the case, that is its business.
The question for us, and this is a fair question for the Leader to ask the Government, is whether there is a reason in the national interest for this Bill to go through at 2 a.m. as opposed to 11 a.m. or midday tomorrow? The same date will be on the stamp. The Leader has indicated to the groups there is a motion for earlier signature, but that will make no difference. It can all be done on the same day, whether 2 a.m. or 2 p.m. tomorrow. I can see no gain in pushing it through tonight.
We must be logical in this regard. Let us assume we are offering co-operation, that we all want to get it right despite our difficulties with aspects of it, and that we are all prepared to sit for as long as it takes. However, all we want to know is why it needs to go through tonight. I asked that question this morning and I think the Leader may have asked it himself but dared not say so publicly. If it has to go through tonight, that is the end of the argument. If the Government does not impose a guillotine in the other House, it will not even be out of it at 2 a.m.
There are many variables to the question. If there is a real reason the Bill must go through, let us do it. If there is not, it is just nonsense to be hanging about. That is what it all boils down to.
Senator Geraldine Feeney: I support the Leader who is not an unreasonable man. He has been very reasonable throughout the past year and I am sure he wishes to continue that way. He gets support from the Opposition benches.
As Senator Walsh said, this is an uncertain time for us economically. Most of us have never known a time like this in global markets or in the State from an economic point of view. Whether or not the Bill comes to the House this evening, it is not much to ask us as Senators, public representatives and elected and appointed Members of the House to come back at 10 p.m. as the Leader has——
Senator Jerry Buttimer: That is not the point.
An Cathaoirleach: Senator Feeney, without interruption.
Senator Geraldine Feeney: Senator Buttimer, you spoke several times today, but I did not interrupt you. There were times when I might have interrupted, but I did not. I ask you to have manners now. Perhaps if you stopped mouthing off so often, you might learn something.
An Cathaoirleach: Senators must speak through the Chair and not across the floor.
Senator Geraldine Feeney: It is not a lot to ask us, as the Leader has done, to come back at 10 p.m. God knows, we are paid well enough to be here
Senator Liam Twomey: That is not the point.
Senator Geraldine Feeney: It is the point, Senator. Fine Gael is on the record as supporting the Government on this legislation and we are pleased about that. However, Fine Gael Members are more or less speaking out of both sides of their mouths now and do not want to be here at 10 p.m.
Senator Jerry Buttimer: Senator Feeney is playing politics now.
Senator Liam Twomey: On a point of order, there is a conflict here that must be resolved. We are not against coming in at midnight or at 2 a.m., but we want to deal with legislation.
An Cathaoirleach: That is not a point of order, but a procedural matter. I call on Senator Feeney to conclude.
Senator Geraldine Feeney: It is not asking a lot for us to come back at 10 p.m. That is what we are paid to do here. I remember during the most recent Seanad being here until 3.45 a.m. I remember walking out of here at 4 a.m. on a night we discussed a Freedom of Information Bill. That was an important Bill but it does not approach in importance the Bill we are trying to deal with today.
Senator Frances Fitzgerald: I suggest to Senator Feeney that we not be disingenuous about this. We are quite happy to work throughout the night, if that is what is necessary.
Senator Geraldine Feeney: It does not look like that.
Senator Frances Fitzgerald: What we are saying is we do not want an unrealistic timetable being put to us now that asks us to come in at 10 p.m., when we know the Bill will continue to be debated in the Dáil until midnight or 1 a.m. The point is that this is what has happened during the course of the past two days with regard to the legislation. I suggest that we adjourn the sitting until 7.30 p.m. for the leaders of the various groups to meet and review the situation. We should see if we can get more information on the likely conclusion of the Dáil debate and come back then with a more realistic timetable. In the meantime, the Leader should tell us if there is a court case pending in the morning and if the European Commissioner intends to make a statement. If the Government is seriously concerned about the national interest and we need to have the legislation passed, let us deal with it.
An Cathaoirleach: I have a proposal from the Leader to put to the House. He has made a proposal that the sitting be suspended until 10 p.m. I am asking if that is agreed.
Senator Shane Ross: No.
Senator Frances Fitzgerald: What about my suggestion?
Senator Paul Coghlan: With respect, the Leader was about to respond to Senator Fitzgerald’s suggestion.
An Cathaoirleach: The Leader did not indicate to me that he wanted to reply to that matter and I must proceed with the business at hand.
Senator Paul Coghlan: Perhaps the Leader was about to respond to Senator Fitzgerald.
An Cathaoirleach: Does the Leader wish to reply?
Senator Donie Cassidy: I remind the House that this Bill has been in the national interest from the time it became known to us. In the national interest, I ask Senators to resume the sitting at 10 p.m.
Senator Michael McCarthy: The Dáil will still be considering the Bill at 10 p.m.
Senator Donie Cassidy: I will do everything I can to preserve the harmonious working relationship which we have enjoyed in this House and to continue the progress we have always made collectively. I am not saying anything further. I am asking for an adjournment until 10 p.m. and I will endeavour to communicate with the leaders of the various groups as soon as I receive alternative instructions to those which the Chief Whip has issued to me.
Senator Frances Fitzgerald: I accept the proposal in the interest of this issue and in light of its importance nationally. I would like the Leader to communicate with the leaders of the groups in the meantime. I hope we can arrange a more realistic timetable at that point so that this farce will not continue.
Question put: “That the sitting be suspended until 10 p.m.”
The Seanad divided: Tá, 27; Níl, 5.
|Boyle, Dan.||Brady, Martin.|
|Butler, Larry.||Callely, Ivor.|
|Cannon, Ciaran.||Carty, John.|
|Cassidy, Donie.||Corrigan, Maria.|
|Daly, Mark.||de Búrca, Déirdre.|
|Ellis, John.||Feeney, Geraldine.|
|Glynn, Camillus.||Hanafin, John.|
|MacSharry, Marc.||McDonald, Lisa.|
|Ó Domhnaill, Brian.||Ó Murchú, Labhrás.|
|O’Brien, Francis.||O’Donovan, Denis.|
|O’Malley, Fiona.||O’Sullivan, Ned.|
|Ormonde, Ann.||Phelan, Kieran.|
|Walsh, Jim.||White, Mary M.|
|Mullen, Rónán.||Norris, David.|
|O’Toole, Joe.||Quinn, Feargal.|
Tellers: Tá, Senators Diarmuid Wilson and Déirdre de Búrca; Níl, Senators Shane Ross and David Norris.
Question declared carried.
Sitting suspended at 7.15 p.m. and resumed at 10 p.m.
Senator Donie Cassidy: I wish to inform the House that I propose to have a further suspension of the House until 1 a.m. at which time we can expect to be in receipt of the Credit Institutions (Financial Support) Bill 2008. It is proposed to commence Second and Subsequent Stages of the Bill at that time.
A Cathaoirleach: Is that agreed?
Senator Paul Coghlan: We need to hear the reasoning.
Senator Frances Fitzgerald: I understand the Dáil has agreed to sit late in order to conclude the legislation this evening and that it is considered important that this legislation be passed tonight, and as a result the Seanad will sit late to discuss its detail and pass the legislation. I support what the Leader is saying.
Senator Liam Twomey: What will be the sequence of events?
Senator Paul Coghlan: Do we know what was agreed between the Whips in the other House? For the information of this House I would like to know the sequence of events.
An Cathaoirleach: The Leader has announced that the House——
Senator Paul Coghlan: I do not object to what the Leader has proposed.
An Cathaoirleach: ——will sit at 1 a.m. Is that agreed?
Senator Paul Coghlan: With a bit of elaboration, perhaps.
Senator Shane Ross: Do we have a guarantee that the other House will be finished by 1 o’clock?
Senator Donie Cassidy: Yes. I have been assured 12.30. This has been agreed by the Whips.
Senator Frances Fitzgerald: I take it there will be a break between the Second Stage and Committee Stage in order to allow time to submit amendments.
Senator Donie Cassidy: If the leaders of the groups are available after this I would appreciate a meeting with them to agree on the timeframe for Second Stage, the sos between Second Stage and Committee Stage to allow amendments, and then the timeframe for Committee and Remaining Stages.
Senator Jim Walsh: I understand the Whips in the Dáil have agreed to group the amendments and perhaps it might be an idea if we could agree the same here. I understand they put a time limit on each of the groups so that it will be finished in the Dáil by 12.30.
Senator Pearse Doherty: Is the Leader aware whether the Minister will accept amendments in the Lower House? I understand he may not accept amendments because the Bill would then need to be reprinted and there would be printing difficulties before it came to the Seanad. I understand he may accept amendments here, which would mean it would need to go back to the Lower House to be passed. That would mean that House would need to deal with the Bill in the morning. Is the Leader aware whether that is the case?
Senator Donie Cassidy: I have informed the House what I have been told. I have been told there has been agreement among the Whips that the business will be concluded at 12.30 and we are to order the business here for 1 o’clock and to conclude the Bill tonight. When I meet the group leaders I intend to propose that we meet tomorrow at noon. I understand the dreadfully late hour in the evening that it is and I really appreciate the efforts, patience and co-operation of every Member of this House, the group leaders, the Whips and everybody concerned, you, a Chathaoirligh, and most importantly of all the staff who are staying with us right through the night to assist in passing this important legislation.
An Cathaoirleach: Is that agreed? Agreed.
Sitting suspended at 10.05 p.m. and resumed at 1 a.m.
Senator Donie Cassidy: I apologise for the ongoing delay in bringing the Credit Institutions (Financial Support) Bill 2008 to the House. I understand we will not be in a position to receive the Bill until 2.15 a.m.
Senator Jerry Buttimer: What happened to 10 p.m.?
An Cathaoirleach: The Leader without interruption, please.
Senator Donie Cassidy: I therefore propose the suspension of the House until 2.30 a.m., at which time we will take all Stages of the Bill.
Senator Frances Fitzgerald: We will certainly have to hope that the execution of the legislation is better than its birth.
Senator Jerry Buttimer: Hear, hear.
Senator Frances Fitzgerald: This is the way the legislation has been handled in the Dáil as well as in this House, and it could have been handled in a better way. However, we now have no choice but to meet again at 2.30 a.m. to consider——
Senator Nicky McFadden: It is 2.15 a.m.
Senator Paul Coghlan: That is another point. Will it be 2.30 a.m.?
Senator Liam Twomey: Will it be 2.30 a.m. or 2.15 a.m.?
Senator Frances Fitzgerald: Will it even be 2.30 a.m.?
An Cathaoirleach: That is agreed. It is 2.30 a.m.
Senator Nicky McFadden: It is 2.15 a.m.
An Cathaoirleach: Is it 2.15 a.m. or 2.30 a.m.?
Senator Donie Cassidy: I wish to inform the House, with the permission of the Cathaoirleach, that the time will be 2.30 a.m. by agreement of the leaders. The Minister will address the House at that time, and on conclusion of the Minister’s address we will have two hours for Second Stage. At the conclusion of Second Stage we will have a sos for 15 minutes to allow for the placing of amendments.
Senator Paul Coghlan: That is not sufficient time to allow us to frame amendments.
Senator Donie Cassidy: The leaders have agreed with me on this.
Senator Dan Boyle: The amendments are outside.
Senator Donie Cassidy: This will be followed by Committee and Remaining Stages.
Senator Jerry Buttimer: Do we have to take it tonight?
Senator Donie Cassidy: Based on this timeframe, the Bill should be concluded around 7 a.m.
Senator Jerry Buttimer: Do we have to take it tonight?
Senator Joe O’Toole: This is ridiculous and unnecessary at this point. We should adjourn until 7.30 a.m. and deal with it then. The Leader knows my views on this.
Senator Paul Coghlan: That makes eminent sense.
Senator Joe O’Toole: I just do not think it is necessary.
An Cathaoirleach: The Leader has made the proposal and there is agreement.
Senator Joe O’Toole: We are still not gaining anything at this point by putting it through.
An Cathaoirleach: That is agreed. The House is suspended until 2.30 a.m.
Sitting suspended at 1.10 a.m. and resumed at 2.30 a.m.
Senator Donie Cassidy: I wish to move an amendment to the Order of Business. It is proposed to take No. 3a on the supplementary Order Paper, the Credit Institutions (Financial Support) Bill 2008, all Stages, with the contributions of spokespersons on Second Stage not to exceed eight minutes, those of all other Senators not to exceed five minutes, and on which Members may share time by agreement of the House. It is proposed that Second Stage will conclude not later than 4.40 a.m. if not previously concluded, and that Committee and Remaining Stages will be taken 15 minutes after the conclusion of Second Stage to allow for amendments.
An Cathaoirleach: Is that agreed? Agreed.
Question proposed: “That the Bill be now read a Second Time.”
Minister of State at the Department of Finance (Deputy Martin Mansergh): I thank Senators for agreeing to sit late tonight. This Bill provides legislative underpinning to the financial support provisions announced by the Government on 30 September for depositors and lenders to Irish financial institutions. It is a significant measure so that they can continue to provide the financial services that are vital for the proper functioning of our economy and the well-being of society.
The financial services sector in Ireland has contributed enormously to growth in employment, export earnings and economic activity. Our banks entered the current period in a position of strength but, like financial institutions everywhere, they rely on international capital markets for liquidity. When that becomes harder to access, banks find it increasingly difficult to carry on normal business. It is the shortage of liquidity that is at the heart of much that is happening in financial institutions around the globe. Moreover, what funding is available is also at a significantly greater cost than official market rates and lending periods have continually shortened.
This is the context in which the Government determined to take action. The primary purpose of the Bill is to maintain the stability of our financial system which it does by providing a legislative framework for the guarantee arrangement for depositors and lenders to Irish financial institutions announced by the Government yesterday. The Bill responds to the difficulties caused for Irish credit institutions because of the turmoil in international financial markets that began in August 2007 and which have persisted and deepened since that time. That crisis originated in the credit markets of the United States and has now spread and broadened. Internationally, major financial institutions have gone into liquidation, been forced into partnership or been subject to state takeover. In both the US and Europe, public authorities have been called upon to provide unprecedented support. Where once financial institutions and markets were the concern of a few, there is now near universal awareness of and interest in their well-being.
Having received the advice of the Central Bank and the Financial Regulator, the Government decided the right and necessary step was to provide a guarantee to the six domestic financial institutions which were not in a position to rely on the support and assistance of a parent institution. I want to put it clearly on the record of this House that the Government’s decision is intended, in the first instance, to underpin the financial standing of the Irish banks and building societies. It provides a framework for the future to address financial stability, which is of common concern with our EU partners and especially our closest neighbours in view of the strong degree of financial integration between the two jurisdictions and the several financial institutions which operate in both.
I have been at pains to stress that the provisions in this Bill should in no way be viewed as a free lunch for the banks. The guarantee provided by the State is not intended to insulate the shareholders of banks from the risks that they have taken on. I want to reiterate that this guarantee is not free and it is not a bail-out. The taxpayer who ultimately underwrites this support will be paid for the support provided. The terms and conditions on which the guarantee is provided will ensure the taxpayer gets value for money.
Our society and economy will benefit from a guarantee that helps to secure greater stability for our financial system. That system not only plays a crucial role in the Irish economy and our day-to-day lives but also, through the financial sector, has broader social responsibilities to society at large. More directly, the Minister has announced in the other House that he will draw on the advice of the Central Bank and the National Treasury Management Agency to put a fee mechanism in place to remunerate the guarantee at a commercial rate taking into account such factors as the possibility of increased funding costs for the Exchequer, the economic value for the institutions and the need to support investor confidence in the Irish financial system overall.
There has been comment that the Exchequer is potentially assuming very significant risks with the measure in this Bill. This simply is not the case. There are real and substantial factors that mitigate any potential financial exposure as a result of this decision. Crucially, there is a very substantial buffer comprising the equity and near-equity of these institutions. The Central Bank and Financial Services Authority of Ireland is preparing detailed analysis, but initial work by the NTMA indicates the assets of the Irish finance institutions supported by this measure exceed their liabilities by approximately €80 billion. This is not diminished by the access some of the banks have had to European Central Bank liquidity on the basis of asset swap.
It is important also to appreciate that the asset quality in our financial institutions is good with a strong concentration in residential mortgages with a relatively low loan-to-value ratio, LTV, on average. While Ireland, along with all developed economies, has experienced a sharp decline in its property market, there is very significant capacity within the institutions concerned to absorb any losses.
We have all learned much from the current period of turmoil and one important lesson is that we must maintain the increased level of scrutiny and oversight of financial institutions which was put in place by the Financial Regulator since the onset of the current turmoil. This will be maintained and strengthened further to ensure high regulatory standards are achieved in Ireland and the quality of corporate governance in these institutions is a protection against any risk of loss for the State. As for the issue of moral hazard, I stress it will be a priority of the Government to ensure the highest regulatory and corporate governance standards will apply in all of the institutions concerned, including in respect of lending practices, to safeguard the interests of taxpayers against any risk of financial loss.
An important feature of the Bill is that it provides that in certain circumstances, the Minister for Finance can step into the role of the Competition Authority. He has done this to ensure the maintenance of financial stability fully informs decisions on mergers and acquisitions in the financial services sector, while ensuring no diminution of competition.
I will now describe the main provisions of the Bill. Section 2 establishes that the functions of the Minister for Finance under the Bill are exercised in the public interest having regard to the importance of maintaining the stability of the financial system in the State. The functions in the Bill are granted, in the public interest, because the Minister, having consulted the Governor of the Central Bank and Financial Services Authority of Ireland, has formed the opinion that the exercise of these functions is necessary to protect the stability of credit institutions and to maintain the stability of the financial system of the State. The Minister may continue to consult the Governor and the Financial Regulator in the exercise of his functions after the passing of the Bill. Section 2 also confirms that the Bill will not interfere with the exercise by the Central Bank or Financial Regulator of their functions in respect of credit institutions authorised or regulated in the State.
In section 3, the term “relevant date” is defined as 30 September 2008, the day upon which the Minister announced the decision to guarantee deposits in credit institutions and subsidiaries and protect the interests of creditors of credit institutions on their subsidiaries. This is the date from which the Minister may provide financial support to credit institutions.
Section 5 provides that the Minister for Finance may make regulations to do anything that appears necessary or expedient for bringing the Act into operation. Section 6 provides that the Minister may give financial support in respect of the borrowings, liabilities and obligations to the Central Bank or any person, of any credit institution or subsidiary which the Minister may specify by order. Financial support will not be provided beyond 29 September 2010. Such support would be in such form and manner and on such commercial or other terms and conditions as the Minister sees fit.
Conditions attaching to financial support may include stipulations to require the institution or subsidiary to fulfil all requirements of the Financial Regulator or relevant authority, as well as conditions to regulate the competitive behaviour of the credit institution or subsidiary. The Minister may subscribe for shares and other securities in a credit institution on such terms as he sees fit. For the purposes of this section, the Minister may create and issue securities subject to such interest, consideration and terms and conditions as he sees fit. Money paid by the Minister as financial support under this section will be repayable with interest once funds to do so are available to the company. The section also provides for annual reports to the Houses of the Oireachtas by the Minister on the position regarding any financial support provided under this section, commencing with 2009.
Under section 6, the Minister can make arrangements for this support by means of a scheme. At present, the Bill provides for the scheme to be laid before each House of the Oireachtas and each House can annul it within 21 days. However, the Minister, who will be present later tonight, intends to bring forward an amendment in this House which will significantly enhance the role of the Houses of the Oireachtas in scrutinising regulations under this section. As amended, it will require a resolution approving the scheme before it is made.
Section 7 provides that if a merger or acquisition involves a credit institution and the Minister considers that the proposed merger or acquisition is necessary to maintain the stability of the financial system in the State, then the power to determine whether the merger or acquisition would be in breach of the prohibition on anti-competitive practices in that Act lies with the Minister rather than with the Competition Authority. It also provides for the circumstance in which the Minister may approve a merger or acquisition.
The State is underwriting very substantial liabilities in monetary terms but is, as I have outlined, at a far remove from loss arising from these liabilities. I commend the Bill to the House.
Senator Marc MacSharry: Hear, hear.
Senator Liam Twomey: The debate on this legislation is reminiscent of a patient presenting himself to one with a large unsightly abscess. One has two options to treat such a patient. One can start him on antibiotics or, if it is a particularly difficult case, one can lance the abscess to release the underlying pus. I have the impression that all that has been done this week thus far is to start the patient on antibiotics and time will tell whether that will be enough. While Members will be obliged to go through a number of amendments on Committee Stage, they should consider the background. Although Fine Gael fully supports this legislation and has done so in the Dáil, it is timely to begin to examine the background to what has happened. Members are trying to control a very large pyramid-style scandal. The developers and banks forced thousands of Irish people to buy houses that were highly expensive. The Government did nothing about this scandal because it got a large cut from the outcome and was thereby allowed to fulfil its own agenda in the budgets of recent years. It is regrettable that some of the bodies under discussion, the Central Bank and the Financial Regulator, failed to fulfil their remit by preventing this scandal. That will become more obvious later as we continue to discuss the matter.
There will be a serious backlash from the public concerning this crisis. People realise that the legislation was needed because the banks lent money irresponsibly to a small group of individuals. I heard a comment earlier in the Dáil to the effect that only 40 individuals are involved in half of the considerable loans and property deals under discussion. To some degree the Government, the Central Bank and the Financial Regulator were complicit in what went on. We must face up to that. The sad thing is that it is the ordinary taxpayer who is left with a potentially high bill at the end of it all. Taxes will increase and people will suffer in the future with poorer services, whether in education or the health services. That goes without saying and anyone can understand it.
It was the toxic mix of developers, banks and complicit Government that led to this problem. The toxic failure of the Government, the Central Bank and the Financial Regulator got us into the mess and, unfortunately, it is the same toxic trio on which we must rely to get us out of it. During the debate and discussion of amendments we must discuss this issue further. Can we really trust the Government, the Central Bank and the Financial Regulator to change the practices that we now condemn in both Houses? There will be significant changes from now on in how the banks are regulated and how we conduct our business with them. Some people believe it is a matter of making small changes only and then it will be business as usual. It will not be business as usual and can never be so again.
It is only three months since the Irish Banking Federation came to the Joint Committee on Finance and the Public Service. I have with me the presentation they made to us, including the slides they showed us. The representatives told the committee that the Irish banking system was competitive, well capitalised, profitable and had a strong shock absorbent capacity. They said there was negative exposure to sub-prime markets and that Irish banks had a clean bill of health from respected agencies. They told us this only three months ago and said there was nothing that should worry us. They admitted to some concerns about negative consumer sentiment and said there was a correction in the housing market, but they gave no indication throughout their presentation that there was anything to worry about in the Irish banking sector. Three months later we find ourselves in the middle of a considerable banking crisis. People can say that liquidity changed quickly over the summer but we must be straight in our discussion here. The time has come to talk about it. We have saved the banks with this legislation but there is need to discuss these matters, not to hide behind the argument that the crisis occurred because of international causes. International factors alone did not lead to this crisis.
The Minister of State should discuss what might come out of this and what might be the next step. At issue are six institutions in the Irish banking sector which are being protected. What does the Minister of State believe may happen in the next three or four months? Is it possible that Irish banks will be merged? How would that affect Irish taxpayers, who may be supporting many of the loans involved? What approach will be taken? The proposals under discussion in America constitute a €500 million bailout of the banks there. Members have witnessed what happened in Japan, where the authorities failed to lance the aforementioned abscess. They allowed the problem to drag on, which kept the Japanese banking system in a state of almost permanent recession for more than a decade. Members have been informed that the Minister is following events in Sweden in the early 1990s in the context of his current actions. It might be important for him to come into the House and broaden the discussion to clarify what ideology he is following when he contemplates going down this road. He should state what were the positive points of what transpired in Sweden, how they emerged from their problems and what fears he might have, were we to fail to make the correct decisions in the next few months.
The Irish banking system contains a great amount of toxic debt, about which something must be done. All that has been done up to now is that we have stated we will guarantee depositors. It is highly important to so do because it maintains the confidence of those who put money into the banks. However, we must deal with the issue of toxic debt. This is about giving loans to banks to improve their liquidity and ensure the banking system can crank up again and begin to operate. However, one reason the banks are in this position is that they are carrying what they consider to be incredibly bad or dodgy debts. The Minister should provide Members with an indication of the figures involved. While it appears as though billions are involved, how many billion? Such information would have an important impact on the acceptance of this legislation by the public who need to know exactly how much debt there is about which the Minister considers something must be done.
As much of this debate has been aired in the Lower House during the last two days, Members will not try to reinvent the wheel here. However, for their information, it might be worthwhile to hear the Minister’s views on what will be the next two or three steps after the passage of this legislation. The banking system has been protected and confidence restored. However, if we begin to prevaricate or cover up, the people will become worried again, which will perpetuate the crisis. As I noted, markets can handle ups and downs but they cannot handle uncertainty, which is what happened before last Monday. There was uncertainty and people began to withdraw their deposits from the Irish banking system. In order to better inform Members, the discussion now should be on the next steps beyond this legislation. The Minister of State should fill Members in on the thinking behind the Minister’s actions.
Senator Marc MacSharry: I welcome the Minister of State. Although this is an extraordinary hour of the night at which to be addressing the Seanad, it has been dictated by extraordinary times. On behalf of Fianna Fáil, I thank all the Members of Fine Gael and the Labour Party for their co-operation in this regard, despite the many false starts last night and today. I also thank them for the spirit in which they made their suggestions by way of amendments in the other House and for the discussion that will take place here tonight.
These are extraordinary times and I welcome the introduction of the Bill to the House. In recent days Members have had the opportunity to have a debate on the economy, as well as on the Order of Business, which has allowed many of them to reiterate several points. Given the lateness of the hour, I do not intend to enter into repetitive rhetoric but wish to make a few points. First, the Irish State will go down in history for the action it has taken in recent days. In an unprecedented set of international circumstances, we have witnessed an unprecedented act of leadership by the State in taking this action which was necessary and decisive and, ultimately, will help to deal with the problem, which pertains to liquidity.
Although Senator Twomey and I are friends outside it, we often differ during debates in the House and I must do so in the context of his description of what he called toxic trios and toxic levels of debt. There is no substance to the suggestion that there is such a level of toxic debt in Ireland. No financial institutions engaged in the reckless, ninja-type lending that took place in the United States. While there will be bad debts——
Senator Paddy Burke: We do not know that, as we do not have the facts.
Senator Marc MacSharry: ——and I am sure there were developers——
Senator Paddy Burke: Why are Members here?
Senator Marc MacSharry: I am sure no Member wishes to interrupt any other Member tonight.
An Cathaoirleach: Senator MacSharry to continue without interruption.
Senator Jerry Buttimer: Senator MacSharry should not lecture us.
Senator Marc MacSharry: I certainly will not interrupt anyone but one must deal with the facts to hand. While one may discuss the American situation if one wishes, at issue here is the Irish situation and the fact remains that this debate pertains to liquidity. The solvency issue still is up for debate and there may be some banks which will be obliged to have write-downs and there may be impairments. However, I am confident that because of the interventions of the Central Bank and the Financial Regulator in recent years, about which one may not often have read, there will not be impairments that the capitalised system in our banking system is unable to sustain.
Ultimately, this action has not been an intervention by way of helping, saving or bailing out Irish banks. It is about what my friend and colleague, Senator O’Toole, who I greatly respect, has stated it is in recent days in the House; it is about saving the economy which is our people. Lest anyone is under any illusion, the economy, banking system and society are inextricably linked. One depends on the others to survive. Were the banking system to go, it would have adverse effects on society, the economy, the people and our ability to sustain jobs and operate on a day-to-day basis. That is the reason this measure is important. It arises from an international seize-up that, as all international experts will acknowledge, predominately was caused by reckless banking practices in the United States, not in Ireland. I again acknowledge there will be bad debts.
Senator John Paul Phelan: That is all rubbish.
Senator Marc MacSharry: Members are obliged to listen to levels of interruptions. I do not wish to interrupt anyone, nor will I. Members will be here until 4.40 a.m. on this Stage and all will have their say.
Senator Jerry Buttimer: That is no bother. We are going nowhere.
An Cathaoirleach: There should be no interruptions. I will ask Members to leave the House if they continue to interrupt.
Senator Marc MacSharry: I commend the Government, with the support in spirit of the Opposition, on the innovation and forthright leadership it has shown in recent days. It shows the rest of the world, not least our people, that their legislators are in control and prepared to take the appropriate action as and when needed. One has seen a level of courage and innovation that, lest there was any doubt in recent months, certainly now is present.
I wish to make some points in the context of the Bill. Most importantly, I refer to regulation. While the Financial Regulator has come in for undue criticism in recent days and it might take some time while the solvency issue is dealt with, ultimately we will see how well it has acted in respect of its input into matters such as 100% mortgages and the steps it has asked the banks to take when lending in that fashion. Time will tell exactly how well it has performed in that regard. Personally, I believe the Financial Regulator and the Central Bank have performed in a responsible manner.
On foot of this new legislation, the regulator must be much more vigilant. Having listened to the debate in the Dáil, I agree the State must establish a corporate presence in each bank to ensure lending behaviours are at the optimum level and their most responsible. The State must take a more vested interest because, effectively, this constitutes the people taking a stake in the banking system. The Minister noted the Government was going deep into banking. As it is going deeper than any previous Government, it must be vigilant.
In recent months, far from daily contact with each financial institution, the regulator has been in contact with each of them on an almost hourly basis. However, it is important to take a direct interest in risk analysis and if this constitutes board representation, so be it. The regulator certainly must have some corporate presence in the institutions. I ask the Minister to take this on board. I hope the regulator will actively seek to assess the asset quality of our institutions in order that we can see, for want of a better expression, what is under the bonnet. I do not share the fear expressed by Senator Twomey that there might by some ninja type problem in this country and I believe my view will be borne out in due course.
Senators will agree that in the aftermath of current events, we must seek to have a pan-European, if not global, level of regulation to ensure these events are not repeated. As citizens of the world, we have a responsibility not only to Irish citizens to ensure these problems do not recur.
In recent days, many colleagues have referred to the risks to the taxpayer. As the Minister of State, Deputy Mansergh, has clearly pointed out, the risk is not anywhere near the level indicated by some Members. According to the National Treasury Management Agency, the difference in value between bank assets and liabilities is €80 billion. Nevertheless, we must be vigilant and continually assess the asset quality of financial institutions.
Issues such as remuneration, salaries and bonuses will arise when we consider Committee Stage amendments. I acknowledge that in some cases colossal salaries are paid in the banking system. While I have no particular view on how low or high salaries should be, if the State gets involved in directly dictating salary levels it must ensure we do not impair our ability to attract the best people. I have a mild concern in that regard because there is global competition for the best people.
We are taking the right action at the right time on behalf of our citizens who are our economy. I thank the Minister of State for coming before us and commend the Bill to the House.
Senator Joe O’Toole: I wish to share time with Senator Bacik.
I have no inhibitions in supporting this bold, courageous and necessary legislation. Senators should take care when commenting in the House and those who make statements should be prepared to back them up. For the past two weeks, outrageous, unfounded and unfair criticism has been made of the Financial Regulator by Members of both Houses and commentators across the board. The Oireachtas gave the regulator the powers it wanted to give it. The Financial Regulator does not have legal power to ban products such as 100% and 110% loans because we chose not to give him the authority to take such action.
Approximately five years ago — the Minister of State was a Senator at the time — when the Seanad debated the issue of directors’ compliance statements only a small number of Senators fought for such statements. I ask Members to read the debate to see how committed Senators were to directors’ compliance statements because the outcome of our deliberations was a watered down and clearly inadequate version.
While I hold no brief for the Irish Banking Federation — like Senator Twomey I consistently criticise the organisation — the harsh reality is that the points it made in its presentation three months ago are as factually correct now as they were then. People can argue otherwise if they wish. If there is toxic debt of a level that should worry us, I cannot find it and I assure the House I have made many inquiries in this regard in the past week. If someone is aware of toxic debt, he or she has a duty to say so tonight. I must base my decisions on what I have learned.
Congressmen emerged from the events on Capitol Hill in Washington last weekend looking like a bunch of amateurs with as much credibility as Ballymagash district council. They could not deal with the problem in the United States, whereas all sides in both Houses of the Oireachtas have approached the problem here in an admirable manner, showing unity of purpose, even if there are differences in approach. The debate in the Dáil today was conducted in a highly impressive manner by the main spokespersons, although some of the comments made by other Deputies were completely off the wall.
I regret we have not heard how the proposals will work. The legislation before us will not bail out the banks. I will give an example because it is the only way the issue will be understood. If a developer borrows €400 million from the banks to buy half of Ballsbridge and then goes belly up, the banks are left holding a debt of €400 million and the developer’s property in a depressed market. They must then liquidate the property, for which they will receive perhaps half the value. This means they are owed €200 million, as a result of which they must access their capitalisation. As Senator Twomey noted, Irish banks’ capitalisation is stronger than that of any other national banking system in Europe because the Financial Regulator imposed on them the most intensive and stringent demands in terms of loan-to-value and capitalisation of any European country. Last year, for instance, Irish banks cried foul arguing that the stringent regime operated by the regulator placed them at a disadvantage compared to other banks. For example, in the area of loan-to-value the regulator insisted that any loans of more than 80% of a house’s value had to be backed up——
An Cathaoirleach: The Senator is using up the time of Senator Bacik.
Senator Joe O’Toole: I would like to see how we will make the banks pay for the guarantee. I share Senator Twomey’s mistrust of the banks and I do not want the legislation to operate on the basis of trust in the banks. We must have watchdogs operating in the banks as well as additional scrutiny. Their boards should be dissolved and reconstituted. An oversight body should be also established to examine perks and high salaries and an excess provision should be introduced requiring banks to pay out of their capitalisation.
Senator Ivana Bacik: I am grateful to Senator O’Toole for sharing time. I agree with the Senator that we share a unity of purpose and we all appreciate the necessity that the Government take decisive action to maintain confidence in the economy. Nevertheless, I will criticise the Bill, albeit in a constructive manner rather than for the sake of it. I am genuinely unhappy with many aspects of the Bill about which there is immense uncertainty. While I note Ministers’ comments that the proposed measure will not cost the taxpayer up-front, there is no doubt it will expose taxpayers to an enormous potential liability. The figure of €400 billion is extraordinary. We are effectively giving a guarantee to a banking sector which, in the words of Government spokespersons, has acted recklessly in the past. The Bill provides insufficient guarantees that it will not act recklessly in the future.
I cannot accept the assurances of Ministers and others regarding the substantial equity-based buffer of €80 billion because it sounds like a fiction based on an overvaluation of the property and assets held by banks. It is clear these assets were overvalued and there is no doubt Irish banks hold some toxic debts. None of us knows the extent to which their debts are toxic or the precise liability to which we are exposing ourselves. Given this degree of uncertainty and in the absence of stronger guarantees for the taxpayer and stronger assurances on when the charging regime will come into play and how banks will be penalised if the taxpayer is forced to pay out money, it is difficult to support the Bill.
We were told the measures in the Bill would extend to six institutions. It is difficult to see the reason only six institutions were chosen. An argument has been made about increasing the number. Clearly, however, if more institutions are covered by the measures, the potential liability for the taxpayer will increase. This is another matter of concern. We already know the measures have the potential to impose significant costs on the State coffers should the cost of borrowing increase. The Bill has received strong support from bankers and financial institutions, as one would expect if the measures amount to some sort of bailout. It is very difficult to take their assurances at face value. As Senator O’Toole noted, it is difficult to trust institutions when we know that much of what we have been hearing about the stability of the sector has not been true. If the capitalisation is so secure, why do we need to give this guarantee in the first place? With this level of uncertainty, it is hard to support the Bill, much as I appreciate the need for some form of package to ensure confidence in the economy.
Senator Dan Boyle: At this ungodly hour of the morning we need to ask ourselves how we got to where we are now. It has resulted from a combination of factors, mainly the global situation and partially the situation in which we find ourselves in this country. We are in a position, not unlike that in other jurisdictions, to present to other countries an alternative and a response that is unique. The Government has come up with a response that is in the Irish interest and reflects the reality of the economy. That said, we are in epoch making times. Many of us may question the epoch we are about to make but we must live with the reality of where we are because of a combination of factors, partially global but many brought about by irresponsible practices. The fact that there were those irresponsible practices must be acknowledged by this Chamber and those of us in public life who recognise that we live in a world where the global situation is having too much of an affect on our everyday lives.
I acknowledge the presence of the Minister for Finance. The reality of what we are proposing is that the Government is choosing a response that what is local and indigenous is what we need to protect in the first instance. The uncertainty of the global economic climate means we have to take a course of action that whatever economic activity we need to protect, enhance and promote in the future must in the first place be based in the economy. We have come through an economic climate globally where we have been led to believe the shifting sands of what can be produced in terms of economic wealth do not require long-term sustainability. We know this is not the case. There is a responsibility to which we must live up. In terms of where we need to get to, we must recognise that the financial systems internationally and what has been practised in this country and elsewhere throughout the European Union have been based on a mythology and dishonesty such that people believe wealth can be created out of nothing.
What is being proposed by the Government is that the State needs to take in hand, by way of a underwriting agreement, that the future of the economy is based on the fact that, being the only body that can bring about a guarantee of stability, at least in the short term, it is putting in place a financial system that will be more sustainable in the future than that which we have had in the recent past. We can look at others to make accusations, the United States being the pre-eminent economy on which we have relied too heavily to bring about an unreality as to where we are at.
Ultimately, the Bill asks questions not only of our financial system but where we as legislators can bring our people in terms of a new economic reality. I am satisfied that the safeguards in place here are better than those being proposed by other countries. The reality of the United States vote, which many of us were watching while we were waiting to start this debate, whereby a toxic debt that is not redeemable in the short term is being bought and where our nearest jurisdiction, the United Kingdom, is buying up financial institutions, as and when they are likely to go out of business, is not one that a small economy such as ours can face up to. We are proposing a measure that is bold in its intent but which can be more successful in the medium and long term than what I would argue are the other panic reactions of larger and more established economies. We should take the courage of that conviction and bring it forward and learn the lessons of the economic success we have gained during the past ten years. Otherwise, we will just be repeating the mistakes and replicating other economic failures we have seen throughout the world. I encourage Members to follow that example.
Senator Alan Kelly: I welcome the Minister at this fine hour. The Bill is unprecedented. The reality is that the Minister for Finance is being forced to bring it before us or else the banking sector in Ireland will be facing what many have admitted is a catastrophe. The Irish banks have a build-up of liabilities on their books due to the backing for and dependence on the construction industry. Consequently, they were out of favour on international markets. That is the tone and reality.
The Minister has acted because he was backed into a corner. It is similar to his reaction a few weeks ago to guarantee deposit holders and raise their protection level — he did so only after it had been pointed out to him time and again. Some have said the Bill proposed is an Irish solution to an Irish problem and that worries me. It is not true to say there were no other options because there were, whether it was through an equity shareholding or something similar. Were other options examined and, if so, will the Minister outline any of the ideas considered?
The Government has gone down the road of deciding to bail out the six banks. I agree with Senator Bacik when she raises the question of why these six banks specifically. I would like more information in that regard. It did not emerge in the debate in the other House. We are gambling the State’s silver on the banks. They must respect this and act accordingly, a point to which I will return.
We must examine how we got to this stage. The issue of regulation needs to be examined. We have a banking system that operated recently under the following premise. They could give huge loans to developers across the country without any comeback, especially when it was obvious that the sector was heading for troubled times. They could give out reckless subprime mortgages to people who could not afford them; it was crazy that first-time buyers were given 100% mortgages over 40 years. How was this justifiable? There was real change in the area of credit cards with consumer limits with which they could not live. They were allowed to introduce banking practices that were borderline in their justification whereby people were encouraged to change their banking methods in order to maximise their exposure. In 1992 a couple on lower executive salaries were able to borrow X amount of money from financial institutions; in 2007 they were able to borrow up to five times that amount. If that is not evidence of banking gone mad, that does not show that regulation was not working or demonstrate greed, then I do not know what does. There is a lack of ethics in how the banks have been behaving, pure and simple. However, we would not think that was the case from the way the bankers presented themselves and their analyses in front of the Joint Committee on Finance and the Public Service a number of months ago. The change in international factors has brought new challenges but outside of that everything was rosy in the garden. Were they living in the real world? It seems not.
I do not agree with Senator O’Toole. The chief executive of the Irish Banking Federation said:
I argue they did not take it seriously enough. Either the bankers did not know what was coming down the tracks or they simply were not telling the truth. Either scenario is equally worrying.
Senator Alex White: Hear, hear.
Senator Alan Kelly: I stated these bankers should be brought back before the Joint Committee on Finance and the Public Service or other similar committee to explain their comments and the scenarios in which we now find ourselves. If they are incompetent, why are they in their jobs? If they lied, that is another matter. The bank representatives should sit down and be interrogated again. They should be told that they have an opportunity to explain how we got into this scenario. The taxpayer has bailed them out. An explanation is the least we deserve. How will the Government ensure the taxpayer is not exposed to a huge risk? I am concerned that the Bill is merely postponing the problem for another day. We are still not rid of the debt incurred by the banks. What will happen if our model for bailing out the banks is copied by other large economies and the competitive advantage it is purported we will enjoy is removed? What will happen if a bank collapses? What will be the exposure of the taxpayer and how will this be managed?
Deputy Brian Lenihan: The Senator has no solution.
Senator Mary M. White: Hear, hear.
Senator Jerry Buttimer: The Minister only blames Joe Duffy.
Senator John Paul Phelan: Exactly.
An Cathaoirleach: Senator Kelly, without interruption.
Senator Alan Kelly: There are a number of actions the Government must take and these should be addressed in the Bill. For example, serious consideration must be given to having State representatives on the boards of the relevant banks in order to ensure that proper practices are put in place to protect taxpayers. That condition should be absolute. Members of the public want to see such a measure put in place because it would give them comfort, which is important and which they deserve. If there is an excuse for not including provisions in this regard in the Bill, I hope the Minister will provide it later and will, if necessary, introduce supplementary legislation to deal with the matter.
We should follow the US model and put limits on executives’ pay and perks. We cannot allow millions of euro to be given to bankers in pay and perks while the taxpayer is obliged to write a blank cheque. Last year, the chief executives of the six institutions covered by the Bill were paid €17 million. It would be preposterous not to cap their salaries and the Labour Party will be pushing an amendment to ensure such a cap is put in place. In addition, bankers cannot be allowed to issues shares to themselves during this bail out and a structure must be put in place to deal with how dividends are paid out in order that, should a bank need to be bailed out, taxpayers will not be obliged to look back in envy at the money shareholders received on foot of recent dividend payouts.
Rules must be put in place in respect of how banks are audited. In particular, auditing must be rotated in order that sharpness is maintained. I am concerned that charges which will come into play for the banks as a result of this underwriting are not adequately penal. We must teach the banks a tough lesson for the future. As my party leader, Deputy Gilmore, stated earlier, we have effectively given an insurance policy to the banks under which they will be obliged to pay the premium when they make a claim. That is a good analogy. We must take a stronger line. The banks should be obliged to pay a much higher price, particularly if they are being given a blank cheque by the taxpayer. They should have to pay for the privilege of knowing that such a cheque, the purpose of which is to underwrite their work to date, exists.
In view of the fact that taxpayers are bailing out the banks, what chance is there of latitude being extended in turn to mortgage holders, small businesses and other customers of the banks? During the heady days of rapid economic growth, banks and other financial institutions were dishing out mortgages to first-time buyers hand over fist. It is now incumbent on the banks to allow latitude to home owners to ensure that the nightmare scenario of houses being repossessed and families being turfed out on the street does not materialise.
What does the Government intend to do about non-Irish banks, particularly British institutions, with a significant presence on the Irish high street? This matter, about which there has already been some discussion, must be addressed. I understand the Government is moving towards including other institutions. Such a move threatens to open up a financial Pandora’s box and further increases the potential exposure of taxpayers. What will happen if the EU decides that state aid rules have been broken? The British Prime Minister, Gordon Brown, has already commented on this matter, which is a cause of some concern and which is being examined by the EU Commissioner for Competition.
The Bill simply does not contain enough detail regarding the terms and conditions of the deal. I refer, in particular, to section 5. There is also no indication of the amount the banks will pay for the insurance cover that will be provided under the Bill. This is another matter which must be addressed. What guarantee is there that the banks will limit their current exposure? How can we be sure that the €400 billion liability will not increase to €800 billion? Should the banks covered by the Bill be obliged to seek permission——
An Cathaoirleach: The Senator must conclude.
Senator Alan Kelly: ——to make acquisitions during the two-year period for which the guarantee will be in place?
An Cathaoirleach: The Senator’s time is exhausted. He must conclude.
Senator Alan Kelly: I will do so. Will acquisitions made by the six banks currently covered by the Bill be covered under the Bill? Will the Minister explain why the guarantee is to be of two years’ duration?
Senator Ciaran Cannon: I welcome this opportunity to speak on the decisive action taken by the Minister for Finance in moving to restore confidence in the banking sector and, in particular, to improve liquidity. We cannot expect Irish business to be able to flourish in an environment where there is no liquidity and where banks would have no choice but to turn off the taps on entrepreneurial effort. The Government has made a decisive move that will give Irish banks AAA status internationally and, moreover, access to cheaper funds.
The US sub-prime crisis is not the fault of anyone — the Government, the banks or the people — in this country. It has led to an international credit crisis that has obliged our banks to operate in an extremely difficult environment. Those banks could not have continued to trade in such an environment without the support of the Government. The support we are offering will allow them to leave credit lines open so that people can continue to secure business loans, mortgages and car loans — the kind of credit needed to keep Ireland in business.
Let us be clear that our plan is fundamentally different from those of the US and the UK. Unlike the US, we are not wiping out bad debts or buying up toxic loans; we are simply allowing the State to act as guarantor on Irish banking credit for the next two years. We are not following the UK model of nationalising one bank after another while the entire banking sector suffers death by 1,000 cuts. We are concerned with restoring confidence and getting the economy moving again.
In the past 48 hours, global financial analysts have acknowledged the model we have chosen as an elegant solution to the crisis of liquidity and one which could pave the way for action on the part of other nations experiencing similar problems. This evening there are indications that some other EU nations are moving in the same direction as Ireland. The Financial Times described the Government’s action as the Irish solution to a global problem.
A key element of the plan is that the guarantee is not being given freely to the Irish banking sector. It is being given on commercial terms and the banking sector will pay for it. The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that taxpayers’ interests can be protected. Furthermore, as a result of this legislation, the Minister for Finance will have far-reaching powers to intervene in the banking sector when he believes that a particular bank is acting irresponsibly.
During the past 48 hours, we have shown an example to the world of how to act decisively. We elect the Government to govern and that is what is happening here today. I congratulate the Minister on his courage and decisiveness. I urge him to continue in this decisive vein during the coming months. That same approach is needed to keep Ireland in business and, more importantly, to ensure that it is in pole position when the global recovery begins.
I was heartened to hear the words uttered yesterday by Senator Quinn, one of the most successful business people of his generation, when he referred to the challenges we face. The Senator stated:
The Minister, Deputy Brian Lenihan, might not agree with me when I say that he is most fortunate to be in the position in which he finds himself. He has been presented with the greatest opportunity of any Minister for Finance in the past 20 years to make the kind of sweeping reforms this country urgently needs. It is the difficult situation in which we find ourselves which gives him the real licence and authority to push through the type of changes that will allow hard-working and enterprising people to put Ireland at the very top of the global premier league.
The Minister has begun what I hope will be a swift and effective programme of tough reforms. In March 2006, Michael Dell summed up the relationship that exists between Ireland and the multinationals when he stated:
In October 2008, we are faced with the real possibility that Michael Dell and many others no longer believe in Ireland as a place to do business. We must ask ourselves why that is the case. It is time for us to once again dream those “big dreams” and do what is right to achieve them. The people will, in large numbers, support the person and the Government that has the courage to make the tough decisions required to secure our children’s future. The time is right for such decisions and they must be made now.
Senator Paschal Donohoe: I welcome the Minister. I wish to emphasise that Fine Gael will be supporting the Bill because it believes it is in the national interest. I acknowledge the major effort the Minister has been obliged to invest in dealing with this matter in recent and extremely trying days.
It is also in the national interest to reflect on how we reached this point. An American central banker once famously observed that the role of a central bank is to withdraw from a party when that party begins to get interesting. It is clear that the opposite happened in Ireland in recent years. The punch bowl, which was full, was left in the middle of the room when the party really got going. We were informed that we should drink deeply and that there would be no hangover in the morning. We are all now reaping the consequences.
While my party does not hesitate to support this Bill, because it believes it is in the national interest, a vital issue that must be addressed is why the people, cultures and attitudes, which have so blatantly failed to regulate the banking industry over the past number of years, have now been given new power and the Minister expects us to believe the wit, determination and expertise to wield that power will appear overnight. We must know if the culture that ensured the Government and the authorities it created backed away from making hard decisions and from challenging the vested interests in our banking sector is still there. Is there the determination to make the decisions and challenge the interests which is vital to the success of our country?
For so long now we have seen how this Government was willing to be the lap-dogs of the banking sector. Is the Government now willing to be the guard dogs of it? Is it willing to use the vast, sweeping powers this Bill gives it for the benefit of taxpayers, families and businesses which are dependent on its leadership, which has been absent over the past number of years?
Two other vital points must be made about this Bill and the culture in the banking sector in Ireland. These are domestic points which we must tackle. The first one is the compensation culture in Irish banking. Much discussion has taken place regarding the salary our bank executives receive but that is missing the point. I looked at the compensation package of one of our top bankers — a top chief executive — and only one third of his compensation package goes into salary. The rest of it goes into stock options, bonuses and to deferred pension plans. Will this Government tackle the compensation culture which has rewarded and driven reckless behaviour for which we are all now paying the price?
When one hears the Republican Party in America talk about the need to cap salaries, one knows it is getting away from the bigger issue which is the stock plans and option plans. Will the Minister indicate whether he is willing to tackle them and tell the bankers who come in here and look down on us that the way they are rewarded must change for our banking sector to prosper?
Moral hazard has been discussed at length in both Houses. We now enter the greatest period of potential moral hazard our country has faced since its foundation. We are providing a guarantee by taxpayers to some banks which may be in serious financial difficulty. What is to stop them using that guarantee, or indemnity, to trade themselves out of trouble? Given that they have traded themselves into trouble in the first place, how will we ensure this is tracked and monitored by the Government?
Fine Gael supports this Bill because it is in the national interest. On Monday we heard the voices of the financial markets which said they did not trust the Irish banking sector. In the coming months and years, we could hear those voices again but I hope we do not. Those voices will be mild in comparison to the voices of the people of this country who depend on the banking sector for their houses, and for families. As committed as we are to supporting this Bill, if the Government does not use the sweeping powers this Bill gives it, we will articulate those voices and that outrage in the future.
Senator John Hanafin: I commend the Minister on his speedy response and on the introduction of the Credit Institutions (Financial Support) Bill 2008. There has been significant praise throughout Europe for the efforts of the Minister. The proof is that there is a strong indication that net inflows into Irish banks are looking positive. Last year there were long queues outside Northern Rock, a UK bank, and it was nationalised. It has now said it might stop taking deposits because it has reached its deposit limit.
The Minister has placed our economy — not our banks — on a sound footing. That was the purpose of this Bill. It was not introduced to protect the banks or the people who work for them but to protect the people of this country. He is to be commended for his speedy response, and for the strongest response in Europe. As a result of that guarantee, Irish banks will be highly capitalised and will have the one asset lacking in international banks currently, namely, liquidity.
The alternative was to do nothing. Lack of intervention in the 1920s, which is widely credited to have caused the stock market crash, resulted in a recession turning into a full depression which lasted throughout the 1930s. During that time in the United States, output dived by
25%, 25% of the people were unemployed, income fell and deflation took hold. As we saw happen, there were frequent runs on banks as desperate consumers withdrew their money, eventually leading to the introduction of the bank holiday which was not to give people a day off but to stop them withdrawing money.
What we have averted by speedy and proper action is a serious crisis. It was not a serious crisis of our making. Given that what happens in the Far East and on Wall Street can affect our lives, we should have a say in how they are regulated and run. There is no doubt there was desperate corporate greed in America and Gordon Gekko took hold. Greed was not good. Billions were paid in bonuses to people who repackaged mortgages. The only criteria for getting a mortgage was that one was still breathing. That was not right because the person who gave the mortgage was no longer responsible and responsibility was transferred to the person who bought the repackaged mortgage.
The Minister’s speedy response has served the country well. He has set an example which may be followed by the rest of Europe. We may soon see very strong net inflows into Irish banks not only from the UK but from Europe and the US, as well as confidence immediately restored by this necessary action. Each time there is a net inflow, our exposure is reduced. We have given an insurance policy, and no more than that.
The difficulties in the Irish market were not the reason this Bill was introduced. The reason it was introduced was because of the domino effect. Banks were not lending to each other because confidence had gone. Nobody knew which bank was secure and which bank was not. This was visited on us; we were the innocent party in this. I commend the Minister on taking action on behalf of the country.
Senator Shane Ross: It is very difficult to get a grip on this debate because people on this side of the House are very critical of the Bill and yet wish to be instruments in solving the crisis upon us and do not want to appear to be obstructive. I share that view. We must preface our remarks by agreeing there was a crisis and something had to be done about it. It is then fair to ask whether the right action has been taken and whether we have the right Bill.
I was disappointed by the Minister’s speech because of what did not come through in it and all the discussion is what happened last Monday night. Who came to the Minister and told him it was a desperate situation, or did he ask somebody to come and see him? Did the banks come to him or did he summon the banks? In his speech the Minister attributed no blame for anything that happened in Ireland. The blame is being placed fairly and squarely on the global economy and what is happening overseas. That is nonsense.
I agree there is a considerable element of blame for what happened to be attached overseas. There is no doubt about that, but to pretend that is where all the blame lies is ridiculous. For months and years we have heard the leader of every bank in Ireland smugly telling us not to worry because Ireland does not have sub-prime lending, is pure as the driven snow and everything is fine. What is the crisis about here if we do not have the problem and others do? Ireland does not have sub-prime mortgages in the same sense as the United States, but has the problems the Minister and others have identified in the wholesale money market, and liquidity problems. We also have special problems here which we refuse to recognise. Instead, we try and pretend they do not exist and blame the whole problem on America. That is not right. We have our own toxic mortgages here, but we like to pretend they have not happened.
We have a serious situation in Ireland and this was acknowledged by the international markets last Monday. Why did investors from overseas sell Irish shares like there was no tomorrow and far more than overseas shares? It was because the message overseas was that Irish banks, in particular, were behaving irresponsibly in the domestic property market. That was what was happening and that is the reason there was such a run and selling of shares. The result was a crisis and if it had gone to Tuesday, God knows what would have happened. The Minister might be able to enlighten us on what the catastrophe would have been, which Government spokespersons admit would have occurred, but there would have been an unsustainable catastrophe. Why? The reason is that international markets feel Ireland was behaving especially badly and irresponsibly. The result was a magnificent operation — a public relations job which was superbly handled and came out on time — and the markets rose on Tuesday. The banks and the bankers were saved. I agree the banks should be saved, but not the bankers. The shareholders were also saved.
What about the taxpayers? They have not been saved. This solution does not come without cost. It has an immediate cost and this was touched on by Senator Alex White earlier. Already, on money and bond markets the guarantee the Minister has given will cost us millions. The rate at which Ireland borrows money has risen on bond markets overnight. It is now more expensive for Ireland to borrow than it is for Italy, which is nearly bankrupt. We have leapfrogged other European countries in recent days as a direct result of this guarantee. Those who are going to lend us money will lend it, but will charge us more. That is a direct cost to taxpayers.
It is an extremely bad time for this to happen, because we will go to the markets shortly in our budget, to which I am looking forward, to borrow money to fund a deficit. We will look for billions that will cost us more as a result of the guarantees we have given. We should be aware of this, aware taxpayers will have to pay significantly for the guarantee we have been given.
Senator Fiona O’Malley: As always, Senator Ross has forced me to change what I was going to say. I was about to applaud the Minister and Government for the swift action they have taken.
I have great respect for the opinion of Senator Ross, but he is being utterly alarmist. I agree what has happened in Ireland will cost us to an extent. The cost is €62,000 for €10 billion borrowed and when asked if that is worth it, I think it is, particularly if it is will safeguard the financial institutions in the country.
Senator Shane Ross: That is complete nonsense.
Senator Fiona O’Malley: That is money well spent and that is the reason it——
An Leas-Chathaoirleach: Senator O’Malley, without interruption.
Senator Fiona O’Malley: I have respect for the Senator’s opinion, but he must be accurate and fair about these matters. I agree we need to consider what catastrophe our action has prevented. The banking sector could have collapsed. What does that mean for ordinary people? Life, as they know it, would have ceased and they would not have had access to money as previously. It was for that reason it was important the Government acted as swiftly as it did.
It is to Ireland’s credit that the Government acted decisively. Tonight the American Senate has agreed on a rescue package for America. The UK did not act with the same kind of decisiveness. Our response will stand to us. I appreciate the remarks made by Senator O’Toole with regard to unity of purpose. This move is in all our interests and we are all united tonight in ensuring the banking sector and financial institutions will survive and ride out the difficult times ahead.
The Government has been decisive and we now need to look forward. There is not much merit in looking backward. We need to consider the challenges the changes to the financial sector present now. There will be significant challenges for the financial services sector and we should devise a strategic plan to deal with these. The financial sector is no longer what it used to be. Significant moneys and jobs were created in the sector in the past 20 years, but we now need to consider the long-term consequences of this financial turmoil and ensure a strategic plan is put in place to protect the sector. The sector has rewarded us and brought significant benefit to the country and we must ensure it can survive. The banks are getting a good deal and good terms. Previously, when banks were given assistance, taxpayers got no reward from the deal. They will get some reward this time. It is important we go ahead with this move. It has to be acknowledged that irresponsible lending practices were pursued but we now have a guarantee these will not continue. One would hope that banks’ behaviour will change. We need to ensure that the generosity——
Senator Jerry Buttimer: Generosity is right.
Senator Fiona O’Malley: ——which the Government has shown to banks is shared with the people who face challenges in paying their mortgages. These people have supported the banking sector through their mortgages and they deserve latitude in these times of difficulty.
Senator Dominic Hannigan: I wish to share my time with Senator Alex White.
An Leas-Chathaoirleach: Is that agreed? Agreed.
Senator Dominic Hannigan: We find ourselves in a surreal position. In effect, we are being asked to guarantee loans to the tune of €100,000 for every man, woman and child in the country. We are now the lender of last resort for huge amounts of money and, if the reports are to be believed, even more money is flowing in from abroad. This is putting even more strain on the country’s creditworthiness. Senator Ross is completely correct and if Senator O’Malley would listen to what I have to say, the issues may become clear to her. We are making Government borrowing more expensive because we will have to pay higher interest on Government bonds.
Senator Fiona O’Malley: It will be €10 billion.
Senator Dominic Hannigan: It will be a lot more than that. It will impact on our ability to pay for schemes such as the national development plan. I would like to hear the Minister’s opinion on that. The Minister of State claimed that detailed analysis from the NTMA shows that the assets of Irish financial institutions exceed their liabilities by €80 billion. This is an aggregate figure, however, which does not reveal whether the assets and liabilities of individual institutions are more finely matched. We need to know whether any individual institution is close to the edge because, once again, that will impact on the guarantees we are providing.
We must place caps on salaries and share options because bankers have each way bets at present. By increasing the risks they take, they will gain through bonuses, share options or salaries, and if their risk taking is not successful they will be paid off. They win either way. We must have regard for the moral hazards that can arise. It is not enough to state this will be a priority for the Government. I ask for details on how the Minister expects to achieve a reduction in moral hazard.
Senator Alex White: Senator O’Malley felt she had to revise her comments on the basis of Senator Ross’s contribution. I am in a slightly different position in the sense that I endorse almost all of what Senator Ross said, which is an unusual position for me. With all respect to the Senator, we sometimes approach issues from differing political perspectives. Everything he said was compelling. I will repeat the question he asked several times because we have to keep asking it. For the purpose of clarifying to the public and these Houses, the Minister should tell us what happened last Monday. A momentous event clearly took place. Meetings occurred——
Deputy Brian Lenihan: The Senator wants me to reveal the details of a confidential meeting.
An Leas-Chathaoirleach: Senator White, without interruption.
Senator Alex White: The Minister will have plenty of time to respond. A speaker opposite had an anxiety attack earlier when people interrupted him, so I might be given my two minutes.
Deputy Brian Lenihan: I am not attacking the Senator.
Senator Alex White: Without spin, I ask for a precise explanation of what happened and who was involved. Who approached whom?
Senator Jerry Buttimer: He cannot remember.
Senator Alex White: I am sure he can remember very well.
Senator Jerry Buttimer: He called Joe Duffy.
Senator Alex White: I ask for clarity on the matter. The Minister might then answer the bigger question of what happened between July and last Monday. What happened over the past six weeks?
Do Senators MacSharry and Hanafin really believe their claims that we live in a cocoon of virtue or that the problems are arising in the United States? If they repeat their claims often enough maybe they will believe them. More than 60% of the €416 billion lent by Irish lending institutions is property based. We know what has happened in the Irish economy and construction industry. Irrespective of whether this is toxic debt, a phrase which Senator O’Toole does not like, or debt which we can simply describe as dodgy, a significant domestic element is involved. Lending to the construction industry resulted in a splurge.
An Leas-Chathaoirleach: The Senator should conclude.
Senator Alex White: I ask to be allowed to speak for a further 20 seconds to make up for the Minister’s interruption. The Minister of State stated that the Bill carries no significant risks. Manifestly, however, risks will arise because we do not have a continuing guarantee to the banks. The decision has been made to extend this guarantee, so it is out of the ordinary. Presumably the Minister weighed the risks and the cost to the taxpayer. There is a great deal of self-congratulation coming from the other side but the plan clearly carries costs and risks. The Minister should come clean on what precisely happened. Does he agree with Senator O’Malley and the Tánaiste when they say the banking system was heading towards collapse? Would he use those words?
Senator Geraldine Feeney: I envy the Minister’s stamina because I do not know how he is still going. I am delighted to have an opportunity of speaking on this important Bill. I concur with Senator Cannon that it is an Irish solution to a global problem. Any sensible and informed person would understand this is a brave and decisive move which is necessary to protect the security of our banking system and the wider economy.
This has been an era of prosperity and unprecedented growth in the Irish economy. We were called the Celtic tiger but, when faced with adversity and aggravating external factors, we must bring forth our Celtic fighters. In mathematical terms, I would call that “Brian2”.
Senator Jerry Buttimer: Send in the clowns.
Senator Geraldine Feeney: I compliment the two great Celtic fighters we have in the Government, namely, the Taoiseach and the Minister for Finance——
Senator Jerry Buttimer: The Senator is canvassing for Seanad votes.
Senator Geraldine Feeney: ——for the great foresight and courage they have shown in giving us this decisive and brave legislation.
Senator Eugene Regan: The Minister is embarrassed.
Senator Geraldine Feeney: The Celtic tiger may be wounded but our men in Government will not stand idly by and let it die.
Senator Nicky McFadden: Please Senator, for God’s sake.
Senator Geraldine Feeney: From what I hear in the world media——
Senator Paudie Coffey: Can the Senator put that to music?
Senator Eugene Regan: It is nauseating.
Senator Geraldine Feeney: The Senator hates the truth.
Senator Jerry Buttimer: Are the Oscars being announced tonight?
Senator Geraldine Feeney: The world media have applauded this move and I believe they are ready to imitate it. In my humble opinion, which Senator McFadden will be delighted to learn——
Senator Jerry Buttimer: The Senator was never humble.
Senator Geraldine Feeney: Put that in your pipe and smoke it.
Senator Nicky McFadden: Get off.
Senator Geraldine Feeney: This legislation will save and consolidate our economy with no great cost to the taxpayer.
Senator Frances Fitzgerald: The State has guaranteed €400 billion.
Senator Geraldine Feeney: Irish banks are facing loan losses, as are all the banks in the Western world tonight. They are, however, well capitalised and will be able to cope with these losses. The only thing they cannot control is fear in international credit markets. This, along with the credit crisis, will be solved in time and we will all applaud that. The world economy has not collapsed and the credit markets will return to normality. This brave decision by our Government will allow the banks to ride out the storm.
Criticism has been thrown at the banks, some of it partly justified, about the earnings of their top people.
Senator Jerry Buttimer: The Senator is a populist now.
Senator Geraldine Feeney: However, we should also remember that thousands of Irish people are employed in our banks. They are not fat cats. They are doing an honest day’s work rearing and supporting their families on the salaries they earn. They are ordinary people like you and me. We jump up and down about the loss of multinational manufacturing employment in this country, but we should remember that the Irish financial services employ thousands of people here.
I commend the Bill to the House and I thank the Government, not for propping up the banks, but for propping up our State and our economy.
Senators: Hear, hear.
An Leas-Chathaoirleach: I ask Senators to consider sharing time because 15 Senators have indicated they wish to speak.
Senator Paul Coghlan: I, too, welcome the Minister to the House.
Senator Donie Cassidy: Is the Senator sharing time?
Senator Paul Coghlan: If necessary.
The Minister acted decisively. Perhaps he had little choice. Apparently, a gun was put to his head on Monday night when some of the leading executives of our top financial institutions invaded Government Buildings, and people had to burn the midnight oil. As has been stated, we are acting in the national interest to safeguard our economy, to which the banking system is obviously vital. We need it to keep the wheels of commerce and industry oiled and to safeguard the jobs and livelihoods of our people. As Senator Feeney has just said, there are many people working very hard in our banks, whatever about some of the people at the top, although I am not saying some of those are not working hard also.
It is obvious that the banks masked the situation and totally understated what would appear to have been the necessary provision for bad debts, despite the assurances they gave, as mentioned by Senator Twomey, to the Joint Committee on Finance and the Public Service not too long ago. We must be careful about buying into all of their past poor lending decisions. I look forward to hearing the Minister’s response to this, as well as the other points I will address.
Directors’ compliance, in regard to proper and correct corporate governance, must be examined. I have no doubt this is very much on the Minister’s mind. The Minister will also, I am sure, talk about the scheme that will lay out the basis for the levy. It is in the public interest, as the Minister has indicated already, that he ensure proper representation on the boards of the banks. Equally important are the codes of practice for risk assessment committees and the proper regulation of these. The quality of management of the banks, in light of what we have now learned, has left much to be desired. This requires careful examination. I would also like to hear from the Minister on that. The State is going in deep. There is now no doubt about that. There has been excessive remuneration at the top in the banks for short-term success which did not last. That must be ended forthwith.
I would like to hear the Minister’s view on auditing within the banks. Auditors are there ad infinitum, it would appear. They are there too long and too many cosy relationships have been built up. What equity is it proposed to take, and on what account would the Minister propose to take it? As has been said, the Minister is being given major powers. I am not saying he will not act responsibly; I accept that he will. However, there is major responsibility involved, and the Minister must talk to us about the banks. Some of them behaved badly, perhaps recklessly in a few instances. I agree on the need for higher charges and for the State guarantee, and those banks that engaged in higher-risk lending——
An Leas-Chathaoirleach: The Senator has one minute.
Senator Paul Coghlan: We need an approach of due diligence. No doubt the Minister will talk about that.
This is a very important point. Is the State guaranteeing the overseas operations of our banks? Do we have sufficient regulatory control in terms of guarding against any future rustling? I also mention the ring-fencing of foreign banks operating here. I understand the Minister is looking into banks, other than the six Irish banks, that are licensed and regulated within the State, such as Ulster Bank. These matters must be very tightly contained. We must ensure there is no jiggery-pokery with regard to inter-bank lending. I would very much like to hear the Minister’s comments on this.
Senator Mary M. White: On Monday morning, when I heard the Bill would be going through——
An Leas-Chathaoirleach: Does the Senator wish to share time?
Senator Mary M. White: Yes. I wish to share time with Senator Ormonde.
An Leas-Chathaoirleach: Is that agreed? Agreed.
Senator Mary M. White: May I start again?
Senator Jerry Buttimer: Carry on.
Senator Mary M. White: On Monday morning, when I heard the dramatic statement that an emergency Bill——
Senator Alex White: That was before it happened.
Senator Mary M. White: ——would be introduced, I was pleased because I knew this was leadership.
Senator Alex White: The Senator knew before the Minister.
An Leas-Chathaoirleach: Senator White, without interruption.
Senator Mary M. White: We had leadership presented to us on Monday morning. It reminded me of the debate last week between the possible US Presidents-to-be Obama and McCain.
Senator Jerry Buttimer: What about President Mary White?
Senator Mary M. White: During the course of the presidential debate, John McCain commended Ireland on its 12.5% corporation tax rate. We are an innovative people. I am not flattering or——
Senator Liam Twomey: Gushing.
Senator Mary M. White: ——gushing, but I get pleasure when I see and hear leadership.
Senator Alex White: Steady on.
Senator Jerry Buttimer: Mind the chocolates.
Senator Mary M. White: I commend the Minister. I am his biggest fan.
As Senator Ross said yesterday during the debate on the economy, this is not about bailing out the banks but about guarding the Irish economy and everyone who lives and works in Ireland. Nobody is saying that Irish banks are saints, and nobody has said we are blaming America for this. When has that been said?
Senator Jerry Buttimer: The Government said it.
Senator Mary M. White: I would not say that. We all knew that the false boom we experienced, pushed by the banks’ lending——
Senator Liam Twomey: That is unpatriotic.
Senator Mary M. White: The boom the banks’ flaithiúlach moneylending——
Senator Jerry Buttimer: If the Senator came to the Order of Business every day she would not be saying that.
Senator Mary M. White: I was here. The Senator was not here for the last while when I was speaking, and I did draw attention to it.
An Leas-Chathaoirleach: The Senator’s time is up.
Senator Mary M. White: I would like the Minister now to prioritise getting our competitiveness back in order——
Senator Paudie Coffey: Hear, hear.
Senator Mary M. White: ——for the sake of the real companies doing business in this country — not the people in the banks who can sit at their desks and make quick bucks, but the people who are slaving away in manufacturing and services, selling goods abroad. As Dr. Whitaker said on 19 September, we need to prioritise competitiveness.
Senator Alex White: People one never would have seen at the Galway tent.
Deputy Brian Lenihan: What tent is the Senator talking about?
Senator Ann Ormonde: I, too, welcome the Minister, and I compliment the Government on its swift action in trying to restore stability. We are in scary times, and it is only this action, which has been recognised nationally and internationally, and the leadership of the Government, that has secured stability in the financial system. All I wish to say to the Minister in my one minute is that changes are required in the banking system.
Senator John Paul Phelan: Hear, hear.
Senator Ann Ormonde: At the moment, the trust is gone. I grew up in a town where banks were highly respected. I want that respect restored, and I want the Minister to ensure that regulatory standards will be applied to lending practices to protect the taxpayer. Confidence is down at the moment. All I ask the Minister is that he continue the scrutiny that is necessary at this time.
Senator Alex White: Start it.
Senator Rónán Mullen: I welcome the Minister. I am glad the waiting is over. I was reminded of “Waiting for Godot” earlier when Senator Donie Cassidy came in repeatedly and said, “the Minister cannot be along just now but I promise he will be along later”.
Senator Geraldine Feeney: They are on tour.
Senator Paul Coghlan: It is a nonsense.
Senator Rónán Mullen: Better later than never. I support this Bill. It is an irony that the situation we are facing has been brought about by a massive breach of trust by many people in the financial world. We now find ourselves trusting the Minister to use the powers he will have under this Bill to help us into a situation where Irish financial institutions will enjoy full trust at home and internationally.
I was reminded of Donald Rumsfeld’s infamous phrase about known unknowns. The truth is we do not know the precise level of exposure or risk we are taking in taking the step necessary to provide this guarantee to the banks. It is fair to speculate that whatever the degree of risk and exposure we face by acting in this way, the risk and exposure we would face by not acting would be a multiple of it.
We have guaranteed the funds and deposits in our banks, and the repayment of monies on loan to our banks. A jaded cynic commented to me earlier that now our bank officials are effectively becoming civil servants, would they have to take the Irish oral exam from now on?
We need to reflect on the valuable commodity of time. It is said that time heals all wounds. It is time that will give the breathing space needed to allow business activity and money to flow as blood flows through a living organism. We are in the business of gaining time to enable things to return to normality.
Some have commented on the extent of our exposure as a result of this move. The truth is that even when financial systems are working perfectly, there would be a huge degree of exposure if everybody was to call back the money that belonged to them. The whole system is based on confidence so credit can be given, and given again and again, and money can flow through the system. This Bill is an honourable way to build confidence. There will be a time to reflect on the many dishonourable ways in which confidence was sought to be built in recent times in the area of high finance. I would like the Minister to explain precisely how the charges will be levied on the banks for the guarantee being given, whether it will be, as Deputy Eamon Gilmore stated, a case of paying the premium only when the claim is made, or whether there will be a charge for enjoying the guarantee whether they ever have recourse to it or not.
There must also come a time when we reflect. I was taken by Senator Paschal Donohoe’s speech earlier on how trust has been breeched and how people in financial services undermined trust by separating risk management from ethical decision making. Trust was undermined by not saying stop when people moved from risk taking to recklessness. Trust was undermined when people were incentivised to not be transparent and honest, and to produce results by whatever means on a quarterly basis. It was undermined whenever, as leaders, politicians, analysts, journalists or investors, people made dishonest statements about the affairs of their company or industry. Last December the CEO of AIG, Martin Sullivan said the probability of losses on AIG’s portfolio of credit swaps was close to zero, and any write-downs would be manageable. Dick Fuld, CEO of Lehman Brothers, said at their AGM last April that the worst of the impact on the financial services industry was “behind us”. Those are the kinds of statements that undermined trust. Joseph Stiglitz, the 2001 recipient of the Nobel Prize for Economics wrote recently, speaking in an international context, that some of our best and brightest were devoting their talents to getting around standards and regulations designed to ensure the efficiency of the economy and the safety of the banking system.
It is four o’clock in the morning, and I will share a quote from Confucius. One might say we are confused enough already. Confucius said that to put the world in order we must first put the nation in order, and to put the nation in order we must first the family in order. To put the family in order, we must first cultivate our personal life, and set our hearts right. There is a message in there somewhere for the bankers.
Senator Jim Walsh: I will refrain from throwing bouquets at the Minster for Finance or the Taoiseach.
Senator Nicky McFadden: Well done.
Senator Alex White: That will be a first.
Senator Mary M. White: He got plenty already.
Senator Jim Walsh: One does not do that until the game is over. We are only part of the way through this particular game. I went to the Davenport Hotel today with a member of the Labour Party. On the way down she said, “at least we are fortunate to have two of the best intellects in the Houses of the Oireachtas at the helm at this particular time”. I agreed with that. I compliment the Minister on the initiative that has been taken. It was necessary and essential. Increasing the deposit guarantee from €20,000 to €100,000 was a very good initial step, and brought some stability. Following the example of the USA and Britain in the approach taken to hedge funds and short-selling was also important, because to allow speculators, at a time of financial turbulence, to depress prices further would have exacerbated an already difficult situation.
The guarantee has taken the international market by surprise. It was an extremely brave move. It is not without certain risks and the Minister will acknowledge that. The markets have welcomed it, and it is interesting today that one of our major banks, in New York, got between €7 and €8 billion in deposits, which is very significant.
There is money flowing in from various banks into the Irish institutions as a consequence of the initiative taken. That raises its own particular concerns or notes of caution. I know the Minister is taking the necessary precautions to ensure money coming into the bank is prudently utilised within the banking system here, and we are not adding to any exposures that might be there from previous debt that they are handling. That is essential.
People have been saying this is almost an exclusively Irish phenomenon. It is not. This is an international problem because of the globalisation of the international finance markets. It has its genesis in the sub-prime market in the USA. Some Members have compared that with the Irish situation. There is no such comparison. Institutions involved in sub-prime in the USA were lending to people who were high risk, with low creditworthiness, at high interest rates. They then parcelled those loans and sold them on to investment vehicles and other banking institutions. Senator Liam Twomey rightly said, in his opening remarks, the biggest difficulty in any market is not the good news or the bad news, it is the uncertainty. That brought uncertainty and as a consequence led to the lack of liquidity in the market. That in turn has given rise to the situation here. People say property here is overpriced; they are right without a doubt. Our income levels are significantly higher as well. In a comparison last year, Dublin came out at an average of €53,000 per annum. The next highest in Europe was Stockholm, at €36,000. Property prices will, to some extent, reflect income levels.
I have some notes of caution. I do not think we should be too intrusive into the payments and remuneration packages of people in banking. We want a vibrant banking system to continue. There is one area has contributed enormously to the difficulties we have, and it is the area of extravagant bonus payments, which were multiples of the salaries people were getting, being paid to executives. That brought short-term thinking into focus to the detriment of medium- or long-term prudent adherence to fundamental banking principles. That needs to be corrected.
I agree this should be limited to the six institutions already mentioned by the Minister. We should not, under any circumstances, extend it to externally owned banking institutions who should be getting comfort from their own states. I would make only one exception. We have a great success here, which was the brainchild of Dermot Desmond, and implemented through the vision of Charlie Haughey, and that is the IFSC. It is important that anything done in this regard would ensure the continuing success of the IFSC.
Senator Eugene Regan: The Irish banks have devised a very elegant solution to their liquidity problems. They put that to the Minister and he adopted it. He probably had very little choice under the circumstances.
Deputy Brian Lenihan: They do not know that.
Senator Geraldine Feeney: The party of which the Senator is a member would not have thought of it.
Senator Frances Fitzgerald: Will the Senator confirm or deny it.
Senator Eugene Regan: I understand how the Minister reacted. I emphasise the word——
An Leas-Chathaoirleach: Senator Regan without interruption, please.
Senator Eugene Regan: May I have an audience please? I emphasise “reaction”, because to speak and gloat as Senators have done at this stage is out of order. The fact is it was an extreme situation, the Minister did act, or react as the case may be, and he has support across the House. It is entirely out of order to indulge in some of the gloating about the leadership, planning and so on.
Senator Donie Cassidy: There should be no lectures at this hour of the morning.
Senator Eugene Regan: Having said that, no lessons will have been learned if we do not recognise how we got into this situation. It is very simple. Unsustainable and reckless lending practices by the banks, coupled with reckless and inflationary expenditure by the Government, provided the context which created the lack of confidence in the Irish banks and the run on the banks earlier this week.
I have a problem with the structure of the Bill. There is a general principle in legislation that primary legislation should set out the policies and the principles and that a statutory instrument adopted by the Minister would set out more details but within the parameters set by the primary legislation. I cannot find the parameters. It is at the entire discretion of the Minister, therefore we might as well be reading a statutory instrument.
Senator Paul Coghlan: It is very wide.
Senator Eugene Regan: It starts with regulation and schemes to be adopted by the Minister. I cannot even find clear wording to provide for the type of indemnity that is being provided by the Government in this legislation.
In his contribution the Minister of State made a number of points including what it is intended to do under the legislation. He said it is intended to put “a fee mechanism in place to remunerate the guarantee at a commercial rate taking into account such factors as the possibility of increased funding costs for the Exchequer, the economic value for the institutions and the need to support investor confidence in the Irish financial system overall.” Where in the Bill can I find that statement? The Minister of State said that it was a priority of the Government to ensure that the highest regulatory and corporate governance standards will apply in all of the institutions. Where can I find that in the Bill? If we are adopting primary legislation, which sets out the supports for the banks and the conditions which apply, I do not see it in the legislation.
Senator Jerry Buttimer: The Minister had no choice but to act and I commend him for so doing. He had no choice because this crisis is of our making. I advise him to speak with and listen to Joe Duffy because, without him, we would not have had the guarantee raised. He was not the person who caused a run on the banks. The crisis has been caused by three groups——
Senator Geraldine Feeney: The party of which the Deputy is a member only listens to George Hook. We do not like Joe Duffy.
Senator Jerry Buttimer: ——the banks, the Government and the big developers, those who Senator Feeney and her ilk have supported at the Galway Races for many years.
Senator Geraldine Feeney: The Deputy is doing a Michael Ring on it now.
Senator Jerry Buttimer: The 21st century Ireland has been given a very valuable lesson during the past 12 months. There has been the failure of accountability by Government, loss of morale by our financial institutions and large developers and the failure of the Government to govern and act in the national interest on behalf of the people. We should represent the people, which we have not done. The Government has neglected to do so and those on this side of the House have acquiesced. The big concern of the people is what is the cost to them. How will it affect them? They need banks and the hole in the wall to cash their pay cheques but not to look after the bankers’ friends, the big developers with their billions of euro. Fine Gael has always done the right thing for the country. We support the Bill to secure the jobs of our people, to protect their small savings and to keep our economy buoyant and afloat and we will never let the people down.
Senator Paul Coghlan: Good on the Senator.
Senator Déirdre de Búrca: I welcome the Minister to the House. While I will not throw any bouquets in his direction, like my fellow Green Party colleagues, I am satisfied to support the Credit Institutions (Financial Support) Bill 2008. If we are prepared to be honest, the Government had little alternative but to act in this way.
Senator Jerry Buttimer: Hear, hear.
Senator Déirdre de Búrca: To have not acted swiftly would have led to a very serious disturbance of the economy. As other speakers have said, it would have moved out beyond the banking sector and have had a much wider economic, social and employment impact. As the Minister of State, Deputy Mansergh, outlined earlier, this Bill is necessary to protect the stability of credit institutions and also to maintain the stability of the financial system of the State. In order to achieve these ends, the State has provided a guarantee to six domestic financial institutions which, as the Minister of State pointed out, were not in a position to rely on the support and assistance of parent institutions.
However, it is important to point out that the same protection and underwriting was not extended to other financial institutions operating in the State. This does raise issues and questions around competition. It appears to give an advantage to those institutions to which the State has extended a protection and it also seems to raise equity issues. It is Irish citizens in the main who have their savings in institutions such as the Ulster Bank, Bank of Scotland and so on and it does not appear fair that those citizens and those institutions do not enjoy the same protection as the institutions that the State has underwritten.
An increasing number of financial and banking services operate across the borders of member states. Fortis is an example of one of these. It is obvious that the traditional model of governments acting on behalf of or in the interests of national champions in crisis situations such as this will no longer be as effective given that financial institutions are increasingly located across a number of member states and it is hard to identify where the parent institution might be based.
I ask the Minister to use his influence on the Council of Ministers to call for an EU-wide regulatory authority for financial services. This has been mentioned in recent days. It would be sensible and feasible to begin with the countries that belong to the eurozone because they have the same monetary system, the same interest rates and so on. The Minister, as an influential player in the eurozone group, will be in a position to push for the establishment for the EU regulatory authority for financial services. In time, I hope it will extend on an EU-wide basis and ultimately we will be speaking about an international system for regulating financial services. As the Minister of State, Deputy Martin Mansergh, pointed out earlier, this credit crisis originated in the United States. The saying goes that if the United States sneezes the rest of the world catches a cold. We need an international system of regulation of financial services but this should begin at an EU level. I ask the Minister of State to use his influence to make sure this happens in the wake of the crisis we are now experiencing.
Senator Pearse Doherty: I intend to support this Bill as my party colleagues did in the Dáil when the vote was taken there in the early hours this morning. We do this because the Bill is in the national interest but we do so with reservation because we know that the Bill could be much better. It is disappointing that the Minister for Finance did not accept my party’s amendments and those of other parties which would have strengthened the Bill.
When we debated the economy in this Chamber last night I said there is an onus on the Opposition not only to highlight the problems in the economy but to propose and support sensible solutions. My party understands that the Government must intervene to stabilise the economy and the financial system and that is why we will support the Bill. The logic behind this move is to undermine the bear market and lead to investment in our banking system.
This legislation is about more than the banks. It is about offering security to ordinary citizens and to investors in Irish businesses which in turn means jobs. As the media speculated, other states may well follow this move by our State.
The concern on the street in recent days is about what we will get out of the move. What will the Government extract from the banks in return for this legislation? That is where the Bill falls short. It does not offer the necessary details to inform us of terms and conditions. We must be particularly cautious about this move because the Central Bank has proved itself to be entirely incapable of doing its job. We do not know what the budget sheets of the major banks look like and what liabilities Irish taxpayers now undertake. The guarantee must be underpinned by further conditions and we must have details of these.
When the Government bailed out Allied Irish Bank in the 1980s after the ICI collapse, a levy on banks was introduced. A similar initiative must be included in this Bill to build a fund that will serve to meet the insurance requirements the banking sector clearly needs. If this guarantee does what it should the banks should make a profit from borrowing the State’s name. They should pay significant compensation to the State for that security.
There should also be a commitment from bank management to forgo any bonuses over the time covered by this guarantee. Those individuals should consider cutting their enormous salaries. As a separate matter, there must be transparency in the banking system and better regulation.
While my party welcomes this decisive move we must point out that action could, and should, have been taken many years ago. As long ago as 2005, the Oireachtas Joint Committee on Finance and the Public Service made recommendations on bank charges and interest rates. My party colleague, Deputy O Caoláin, was a member of the committee and initiated the process. The committee exposed the lack of transparency on the part of the banks with regard to customer charges and urged the need for further regulation of banks.
We must know what assurances will be given to ordinary people. That is one of the big questions we must ask the Minister. What assurance will be given to those people who have lost their jobs in the construction sector, who are mortgaged to the hilt, who face negative equity in their homes or are at risk of losing their homes? These people did not earn big bonuses over the boom years while others reaped millions. This guarantee will mean nothing to those people or to those whom the banks haul before the courts and who find themselves currently embroiled in court hearings because of mortgage default. When was the last time the Government sat through the night to come up with solutions for the problems of such people? When was the last time the Government showed the same type of commitment, sitting through the night to deal with the crisis in our health care and our school building programme or our unemployment rates that are spiralling out of control? I urge the Minister to show the same determination to those issues that he brings to this one.
It is imperative that the Government offers the same level of security now offered to the banks to ordinary people who are in debt to the same banks. Thus far, no bank has moved on any major developer to recoup loans but homes continue to be repossessed. I seek, along with this guarantee, an immediate moratorium on home repossession. Every step must be taken to ensure that people can re-schedule loans where required, defer payments on the capital sum borrowed, and negotiate interest-only payments for a designated period if required.
I support this Bill and hope the Minister will accept some of the amendments put forward, but I do not believe he will. The Bill could have been better but it is in the national interest and therefore my party supports it in this House as it did in the Dáil.
An Cathaoirleach: There are only five minutes left and four people on the Opposition side wish to speak. Senator Fitzgerald is next on the list.
Senator Frances Fitzgerald: I will share my time with Senator Phelan.
Senator Paddy Burke: On a point of order, is there provision for the Minister to reply?
An Cathaoirleach: I was due to call the Minister at 4.40 a.m. but because two people are to speak now I ask if the Leader will agree to allow five minutes extra for the other two people to share time. Is that agreed? Agreed.
Senator Frances Fitzgerald: I welcome the Minister to the House. It has been made clear that Fine Gael supports this legislation. We believe it to be in the national interest. I caution, however, against the euphoria and self-congratulation which comes from some members of the other side of the House. This is by no means the end of the game but rather the beginning of an entirely new set of circumstances, the outcome of which is uncertain.
Senators: Hear, hear.
Senator Frances Fitzgerald: We hope it will give the kind of confidence in the economy that will safeguard our banking sectors and jobs and create a new economic dynamic. As we have seen in recent months, there is now considerable uncertainty in the world economy and in world finance. That magic ingredient, confidence, is not always present when we have expected it to be. There is no absolute guarantee that this step will work in the way we hope it will. We wait and see. The Government must take several actions which it has not taken in previous years. Regulation and management have been sadly lacking in overseeing our public finances.
Take, for example, the property bubble where warnings were received month after month up to the 11th hour. Under the former Taoiseach, Deputy Bertie Ahern and the former Minister for Finance, Deputy Brian Cowen, the Government supported the bubble and said there was no problem right up to the 11th hour. There has been much criticism of the Financial Regulator and the Central Bank but they were influenced by what the Government said about the property market and the state of the economy. The Government questioned anyone who raised concerns about that property bubble.
Senator Donohoe spoke very well about the challenge the Minister has in the weeks and months ahead, given the powers he has appropriated in this legislation. The Minister will be required to report back to the House about that action and about the type of regulatory function and discipline which he must show.
Senator John Paul Phelan: I thank Senator Fitzgerald for sharing her time. I have some points to make that have not been mentioned. One relates to section 5. In my time in the Oireachtas, this is the most sweeping section I have seen in any legislation. It states that the Minister for Finance may make regulations to do anything that appears necessary or expedient to bring this Act into operation. I understand that when emergency legislation is drafted it may be necessary to have a catch-all section. Those, however, are unprecedented powers. I echo the sentiments of Senators Donohoe and Fitzgerald in hoping that the Minister will use those powers correctly.
Earlier in the debate, someone asked how this legislation sits with EU competition law. While I am not an expert on that subject, it is the single issue on which I have received a fair amount of correspondence in respect of the Bill in recent days. A number of people who have a detailed understanding of EU competition law have told me the Bill does not sit squarely with EU competition law. The Minister’s response should explain how he perceives this matter. I echo Senator Alex White’s simple question regarding what happened on Monday night, as the public is due an explanation as to how this series of events came about. I also agree with Senator Regan’s observation that the Minister, who has taken some action, has received many plaudits. However, it appears to me that this constitutes the bankers’ solution. While I support the Bill, it contains much that turns my stomach and to which I would be diametrically politically opposed in normal circumstances. However, I understand and accept that the circumstances are extraordinary.
The Minister of State, Deputy Mansergh, made a sweeping statement, which I ask the Minister to interpret. In the middle of his speech, he stated, “We have all learned much from the current period of turmoil”. What have we learned? Have we learned that the banks can do as they wish and ultimately, the Government will bail them out on any issue? What specifically has been learned from the current period of turmoil?
It appears there are two distinct strands to this crisis at present, namely, the global credit crunch and the bad lending practices that have occurred in Ireland in recent years. There is a danger in the midst of this crisis that we will turn a blind eye to those bad practices and that they will continue in future. This cannot be allowed to happen.
Senator Paudie Coffey: I thank the Leader for allocating additional time to allow me make a contribution. As have previous contributors, I must ask the reason we are in this position. Some reality has hit home, in particular on the Government side of the House, where I detect that the smugness and arrogance of the past few years has begun to dwindle. I refer to most, rather than to all, Members. Members on this side of the House wish to co-operate for the sake of the nation. I have heard that international factors have contributed to the position in which we find ourselves and I agree the credit crunch has reached these shores and is affecting us to a significant extent. However, as has been outlined in this debate, it certainly is not the only reason. Why have the unemployment figures increased by 50% in the past year? As noted by previous speakers, that is related to competitiveness and not simply to international factors. The Minister should consider this.
I have been castigated for making the point in the House that since the birth of the Celtic tiger, the Government has propagated a climate of over-dependence on property. We now are reaping the rewards of that policy and ethos. While continually ignoring the warning signals that were being brought to its attention, the Government was not prepared to listen because of a certain degree of smugness and arrogance as the good times rolled. Anyone who questioned this was labelled as a prophet of doom. It was highly unfair to be dismissed in that manner and the Government has a lesson to learn in this regard. I am no economist and do not claim to be an expert on financial matters. However, I understand the fundamental point in respect of the risk associated with over-exposure. At present, this State is dwindling towards this risk, which is a pity because of the associated victims. I refer to people who were allowed 100% or 110% mortgages and who, 15 years ago, were unable to secure a basic ESB loan to buy a washing machine.
The fundamental question is why the banks were allowed to run riot in this regard. It was scandalous to allow it to happen. Where was the Government in this respect? The answer is simple; its fingers were in the greasy till. It was on the take as it took in the associated revenue from capital gains tax, stamp duty and VAT. However, taxpayers and people holding mortgages have been left to carry the can. Three months ago in this House, I asked the reason the Government could not come to the rescue of Waterford Crystal. Why was it unable to guarantee that company’s loans when it now is able to guarantee billions to the banks? As this was an indigenous industry, the same principle applied. However, when it suits the Government does as it wishes, given what took place in the early hours of Monday morning. I am entitled to raise these issues and while the Minister might look at me in astonishment, this is what people are thinking today. I refer to the hard workers who built the economy while the Government was getting carried away.
Senator Paddy Burke: I also thank the Leader for extending the allocated time to give me a few minutes to ask some questions. The Minister for Finance stated in the Dáil that he will await the outcome of his officials’ investigations in conjunction with the Central Bank and the Financial Regulator before announcing the scheme. When does he expect to receive a report from his investigators and when does he believe the scheme will be laid before the Houses of the Oireachtas?
Although a number of Senators have queried what took place on Monday last, everyone knows what happened. The Minister’s office and the Taoiseach’s office were inundated with calls from business people and banks to rescue them. I note the Minister is finding it extremely difficult to find a formula to ring-fence the two remaining banks, that is, Ulster Bank and National Irish Bank. The legislation under discussion makes provision for amalgamations, mergers or buy-outs by other institutions. What would be the position were one of the six banks the Minister named on Monday morning taken over by an English or German bank? Would the guarantees still apply or would they cease?
I wish to raise another point with the Minister in respect of clearing cheques. When one cashes a cheque, one must first lodge it into one’s account and it takes 12 days to clear. While the Minister had no alternative to do other than what he did, he should insist to the banks that it should not take 12 days to clear the cheques of ordinary people who wish to cash their wages. He should stipulate that the banks must take control of the matter immediately.
The Minister’s other option was to take a stake in some of the banks. If, contrary to the comments of some, there is no great risk in this regard, why did the Government not choose to take stakes in some of the banks?
Senator Paul Coghlan: The Minister still has that power.
Senator Paddy Burke: It appears this might have been a different or better option if the risk outlined by some people is not there.
Minister for Finance (Deputy Brian Lenihan): First, I thank Members for their diligence in attending to this legislation, which did not commence in this House until after midnight. I understand this is the first time since the foundation of the State that Seanad Éireann has sat and considered all stages of legislation after midnight. There is a reason for this. Markets are watching Ireland all the time and it is important that we send out appropriate signals. This is something the United States has failed to do in recent weeks but is something we can do for our country. I am grateful to the Opposition parties, and to Seanad Éireann in general, for the co-operation they have extended on this matter. As a small country, it is important that whatever we do should be done swiftly and this has been done. I appreciate the strain it places on Members who are attending at this hour and I appreciate the large attendance this evening to discuss the matters before us.
Senator Burke raised the interesting question of the reason the State did not acquire shares in a bank. Under this legislation, it might be possible on some future date to so do. It may be essential for the State to so do on some future occasion. However, to do so in effect would be to bail out a bank. I do not want to hear the verb “bail” again because it is not accurate in respect of this legislation.
As for the scheme that will be brought before both Houses in a matter of days, it is not a bail-out. The legislation is clear that the guarantee must be paid for and I will insist the banks pay the correct charge. The proposals will be brought before the Government. The Central Bank is involved because its staff are our technical experts in this field and, with the National Treasury Management Agency, will advise the Government on what is the appropriate level of charge. The Government will consider the matter, decide what is correct and then stand over a proposal in both Houses. Senators will have an opportunity to comment on many of the details of that issue at that stage.
The reason I mention Senator Paddy Burke’s proposal — I do not criticise him for making it — is that participation in a bank is participation in the risk of a bank. While we have not yet reached that point, it raises the interesting question of what approach we should take on this issue in the legislation.
Before I deal with that issue, I want to mention the subject of the past, upon which many Senators dwelt. From listening to the debate in both Houses, it appears the Opposition parties do not want any persons who work in the banking or building industries to support them in any future election. There are many good builders and bankers and while there are certainly people in both industries who have not covered themselves in glory, they are important industries in our national life.
The question of the culpability of various parties in this matter was well analysed by Senator Donohoe when he cited Alan Greenspan’s famous words about the function of a central bank being to withdraw the punch bowl when the party is getting too strong. Our Central Bank has not controlled the punch bowl since we joined the euro and in any case it never had much control over the punch bowl because we have been in a monetary union since the early part of the 19th century.
While the Central Bank could have taken drastic measures to reduce lending, it was the Fine Gael Party which made abolition of stamp duty a centrepiece of its most recent election strategy.
Senator Paudie Coffey: The Minister is drunk on power.
Deputy Brian Lenihan: Such a measure would have further overheated an already overheated housing sector.
Senator Liam Twomey: Whatever the Fine Gael Party policy was, the Government adopted it.
Senator Paudie Coffey: The Minister did not heed the warning signals.
Deputy Brian Lenihan: We have a collective responsibility.
Senator Alex White: It was the actions of the former Minister, Michael McDowell.
Deputy Brian Lenihan: There seemed to be an obsession with chasing the vote in south Dublin at the expense of the coping classes and younger people.
Senator Jerry Buttimer: The tent at the Galway races was a good example.
An Cathaoirleach: Allow the Minister to continue without interruption, please.
Deputy Brian Lenihan: The reason I raised the contentious issue of the abolition of stamp duty is that people want us to deal with the problems they have, rather than analysing the past.
Senator Jerry Buttimer: The Minister has been caught out and is rowing backwards.
Deputy Brian Lenihan: I want to address again the issue of the punch bowl because the Central Bank was not in charge of it. Since we joined the euro, we have had very low interest rates. That is the fundamental cause of the overheating which occurred in the economy. In the circumstances in which we now find ourselves, we must make a principled decision about which direction to take.
I am pleased Senators have welcomed this measure and are in broad agreement with it. The State faces a difficult choice in this area. On the one hand, it has the option of stepping aside, acknowledging the primacy of moral hazard at all costs and deciding that in appropriate circumstances a bank, as a private institution, should be allowed to go to the wall and be liquidated and wound up. We could have proceeded on the basis of this view which is one that has been taken in the United States and is still strong in Congress. However, if we, as a small, exposed globalised economy, had done so, we would have done incalculable harm to this country’s trade and commerce and the goodwill we enjoy around the world. When one exercises this option, one has default and this undermines the security of credit. In a small country such as Ireland, this would dramatically reduce the confidence others have in dealing with us.
Senator Alex White: Was such a scenario in prospect?
Deputy Brian Lenihan: I will speak about Monday evening later.
On the other side of the equation, one has the option of nationalising one, two or three vulnerable institutions. Does anyone believe that if we had nationalised an institution, it would not have resulted in a run on all the institutions in a small country such as this? We must devise policy which is appropriate for our country. As far as Europe is concerned, and I am a strong European who is proud of our participation in the euro, we were on our own last Monday evening. People are complaining that only six institutions are covered by the proposed measure. The six institutions in question would have been orphans in the world if the sovereign Irish State had not supported them last Monday evening. All the other institutions which want recognition have other sovereigns behind them, some of which are much bigger and more powerful than this State. We had six institutions which had no one to turn to but the sovereign Irish State.
Senator Alex White is entitled to ask what happened last Monday evening and why it happened. I assure Senators that for some weeks my officials and I, the National Treasury Management Agency, the Financial Regulator and the Central Bank had been monitoring developments in the banking sector with great intensity. Following the collapse of Lehman Brothers, an act of default by the United States authorities, a huge shock wave went through the world financial system. Of course, particular banks are vulnerable and Senators identified some of the weaknesses in the asset balances of the Irish banks on the commercial book side, where one has lending for development in the context of a falling house price market and construction sector. These were weaknesses but the banks were working their way through them. However, the shock wave through the world financial system worked itself out in subsequent days and last weekend it worked itself out in all the European countries. A bank failure occurred in one of the largest banks in Belgium and the Belgian state, owing to the bank’s extensive indebtedness, required the assistance of the Grand Duchy of Luxembourg and the Kingdom of the Netherlands to find a solution. A bank failure in a company associated with the financial services centre threatened in the Federal Republic of Germany last Sunday and a failure on Saturday night in Britain was dealt with overnight by the United Kingdom.
Given these international trends and local circumstances, our banking sector has shown immense resilience in withstanding the pressures of recent weeks. It continued to show this resilience but by Monday evening it was clear to the Government that the huge battering the Irish bank shares had taken on the Stock Exchange reflected a general collapse in market confidence in the whole Irish banking sector. This was a very serious situation.
The Government did not initiate any contacts with the banking industry. The Department of Finance has a constant discussion and is in constant liaison with the different banks and the Central Bank to monitor the position and determine what is taking place in the world of Irish banking. I was asked for a meeting by the chief executives of AIB and Bank of Ireland who indicated to me that they and the chairmen of their respective institutions were both interested in meeting me and the Taoiseach. A meeting was arranged and we convened the relevant parties.
While I do not propose to discuss the details of the meetings as they are not relevant for present purposes, the chief executives made clear to us that liquidity was drying up in the Irish banking system and the maturity dates for the various loans they need to fund their business were shortening all the time and reaching dangerous levels of exposure in terms of time limits. All these issues were spelt out to us. The Taoiseach chaired these meetings and acted with total propriety. He heard what the banking interests had to say and asked them to leave the room. He sequestrated them from the rest of those present in order that we could make decisions in what was in the best interest of the nation and State as opposed to private institutions. Six institutions were at issue and we had to consider the collective interest of the Irish banking sector and what measure we could adopt. Naturally, in light of the global position, contingency planning had been under way in my Department for some weeks and we had examined and evaluated various options.
In the circumstances, we consulted the Central Bank and Financial Regulator and the judgment we made was that the best course of action was that which is embodied in the Bill before the House. No course of action is free from risk.
I am very pleased at the international reaction, especially that of North America, to our initiative. The American people feel somewhat paralysed by the inability of their politicians to find a solution and I am glad they seem to be approaching one now.
In regard to our relations with our European partners, I could not advise the Commission prior to the announcement of the decision because of the sensitivity of the matters involved but, contemporaneously with the decision, I advised the Commission of the position. I am glad it has initiated a dialogue with us, it is examining the issues and, as the Commissioner said, she is delighted to assist us in every possible way. There are issues to be worked through. It is well established in European Union law that when there is a threat of systemic disturbance to a whole national economy, a member state is entitled to take action.
Senator Paul Coghlan: Absolutely.
Deputy Brian Lenihan: At the end of the day, there are six banks which would be orphaned without us. Europe was not prepared to adopt them. Therefore, we had to take decisions.
Senator Frances Fitzgerald: That is the point.
Deputy Brian Lenihan: I would be delighted to see the putting in place of a Europe-wide system. I would fear a retreat to economic nationalism or isolationism such as happened after the Great Crash in the United States in 1929. I agree with those Senators who urged me to take the issue up at ECOFIN and within the eurozone group of Ministers to determine if we can we have a Europe-wide protection for banks because difficult issues have arisen here and Senators have referred to them in the context of subsidiary banks.
Our six domestic banks have subsidiary banks elsewhere. An issue arises about their protection because a systemic failure in regard to them could cause contagion within the Irish banking system. In the 1980s we had the systemic failure of an overseas subsidiary institution, which led to a true bail-out of an Irish bank, and the then Government sought nothing in return for the then rescue package for the Allied Irish Bank. I was very conscious of that example because we should not introduce moral hazard into the equation and for that reason the Government decided that, as far as the scheme proposed here is concerned, we are insistent that the banks must pay a price for what they are obtaining.
Side by side with the provisions dealing with the scheme, the contract on foot of it and the provisions of it that we have brought to this House for approval, we have taken the precaution of putting other provisions in this Bill, which, I accept, confer very wide-ranging powers on the Minister and the Government, but they are designed to ensure we can act swiftly if any further problems arise. It is important we have that power in the difficult circumstances in which we find ourselves. Hence, Members will note a provision in the Bill in section 8 where the Competition Authority will not be consulted because, as we can see, it is essential that we can come to a conclusion rapidly, on occasion, on amalgamations and mergers when there is financial instability.
Likewise, we have provided for an amplitude of power in the National Treasury Management Agency whereby the Government can request it to undertake financial powers on the Government’s behalf. Likewise, the powers of financial assistance can be exercised by the Government in regard to these institutions when it is in the national interest to do so and to prevent financial instability.
As far as the particular scheme we are proposing at this stage is concerned, there is no risk for the taxpayer. We are getting value for the banks from it. Speakers rightly have questioned the issue of the ultimate exposure of the taxpayer. Much has been made of the fact that the banks have substantial assets as well as liabilities and that perhaps some of these assets are impaired. There is a substantial cushion of the excess of the assets over the liabilities, but let us be frank about it: we are not going to have a fire sale of all Irish assets tomorrow. That is what the Government does not want to happen. It wants to see the orderly management of the Irish banking sector. The Government is anxious that this House would agree — this is the reason I am in this chair now — to give us the powers to ensure such orderly management takes place. I sense in speakers, naturally from those on the other side of the House but from those on all sides of the House, a legitimate and entirely understandable concern to ensure we will not see the same again as far as Irish banking is concerned.
It is important not alone to deal with the issues that threatened the financial stability of the Irish economy but, as we assume these powers over the banking sector, to ensure the sector lives up to the faith which sovereign Ireland invests in it through the decision of the Government last Monday——
Senator Jerry Buttimer: It was reactionary.
Deputy Brian Lenihan: ——and the ratification of it which the Houses have given. I appreciate the support which has been given on all sides for this measure but I am also deeply conscious of the responsibility it will impose upon me in the days and weeks ahead.
I want to update the House on the progress we have arrived at in designing the scheme and the plans we have for it because it is an important one. My officials are working directly with officials from the Central Bank and Financial Services Authority of Ireland and the National Treasury Management Agency to design the scheme. Good progress has been reported to me and, following the enactment of the Bill, I want the scheme to be laid before this House early next week. It may be that the resolution of technical issues will mean it may be delayed for a few days beyond that but it is in the interests of the State that this be done as rapidly as possible because the Government statement, while it has given confidence and succour to the financial sector for some days, is not of itself a legal document. We require the scheme to be put in place and the contracts to be arrived at with the individual institutions under it so that we have a clear and binding relationship with the institutions which are availing of this benefit.
I have been very much informed by the debate in this House in respect of what is needed in this scheme in a number of areas. The scheme will set out the basis on which the charges will be levied on the credit institutions benefiting from the State’s guarantee, the revenue that it is expected to raise for the Exchequer and the conditions on which the guarantee will be granted under the Act. Clearly, however, there is a need for individuals who have a public interest perspective to participate at board level in the relevant institutions. There is a need for codes of practice for the work of risk committees in financial institutions. There is also a need to have lending practices that are in favour of sustainable, exporting and trading enterprises. There is a need to improve the quality of management. An essential requirement is to check the remuneration approaches, a point to which I wish to return later, which reward short-term performance and excessive risk-taking. Senator Walsh identified the problem very well. That is the essential problem with the remuneration packages that seem to be on offer and which have caused horror not only in Ireland but across the European Union and among my colleagues in the European finance ministries.
There is a need, as Senator Ormonde said, to return to traditional banking values in all our credit institutions and a need for responsible and prudent lending practices on consumer lending. We need a code of corporate social responsibility. We need careful assessment of the risk characteristics and sustainability of our new financial products and we need effective standards of corporate governance. All this has to be written in. I assure Senators that their concerns will be factored in to the drawing up of the relevant scheme.
In regard to remuneration, I do not want to be misunderstood on this point. It is not an appropriate role for the State to interfere in the commercial decision-making of any commercial body provided that decision is subject to appropriate corporate governance standards. The reality is that finance and banking professionals have been highly valued and highly remunerated by markets. As a whole in Ireland, both domestically and in the Irish Financial Services Centre, we need highly experienced and skilled expert people to succeed. Our banking sector is 10% of our gross domestic product. It is easy to abuse the banks, but it very easy also to forget how big a part they now play in our economy. However, success must be built on a sustainable basis. The rewarding of excessive and imprudent by risk-taking by executives is at the heart of the serious problems that emerged in the international financial system. For the future, sensible and long-term sustainable remuneration policies must be part of how financial institutions go about their business in Ireland.
A large and interesting range of contributions were made by Senators. I assure them that I have listened carefully to those whom I was present to hear and I read detailed notes of those who were here while the Minister of State, Deputy Mansergh, substituted for me for a short break. I was interested in the debate in this House, which I found refreshing, and I hope we can continue now with Committee Stage and proceed to see how we can improve this Bill.
Question put and agreed to.
An Cathaoirleach: When is it intended to take Committee Stage?
Senator Donie Cassidy: With the agreement of the House, we will take it at 5.25 a.m.
Sitting suspended at 5.10 a.m. and resumed at 5.40 a.m.
Senator Alan Kelly: I move amendment No. 1:
The Minister will be aware, following the debate in the Lower House, that particular concerns have arisen regarding the terms and conditions and the generic nature of the scheme to which the Bill relates. It will be entirely at his discretion to interpret the conditions under which he will have powers to provide support. The Minister has gone some way towards explaining why this matter has been dealt with in such a generic fashion. However, there is a need to go further. We must set the parameters and principles within and under which the terms and conditions will be applied. Those parameters and principles are not set out in the Bill. Amendment No. 1 is designed to ensure a process to lay before the Houses the particulars of the terms and conditions is put in place in order that the powers the Minister may exercise and the principles that will apply in respect thereof can be outlined and justified.
Minister for Finance (Deputy Brian Lenihan): The Bill is necessary to allow the State to act urgently and decisively in respect of a complex issue when markets are volatile, while keeping the Houses informed of the details. This amendment would prevent the legislation from coming into operation, except in respect of section 7, until the scheme was approved by both Houses. The purpose of the Bill is to enable prompt, effective and expeditious action. Accepting the amendment would defeat that purpose and mark a departure from standard reporting procedures.
The provision for making a scheme in respect of financial support recognises that in a dynamic area, schemes may require revision. It is important we should commence drawing up the scheme, which will be submitted to both Houses, within the framework of the legislation. The amendment would impose a delay and, potentially, a harmful disclosure of an intervention to address a particular need.
I understand the spirit in which the amendment has been tabled. However, it is unusual to include a provision whereby an Act will not come into force until, effectively, a decision under that Act is made. The purpose of enacting legislation is to enable decisions to be made. With respect, I am of the view that this proposal puts the cart before the horse in legislative terms.
Amendment, by leave, withdrawn.
Question proposed “That section 1 stand part of the Bill.”
Senator Paddy Burke: If one of the six banks covered by the legislation were taken over by an outside financial institution, would the guarantee extend to that bank following the takeover or is the scheme designed in such a way that mergers will only take place among the six banks to which I refer?
Deputy Brian Lenihan: That is an extremely pertinent question. As previously indicated, it is intended, subject to the commercial discussions which must take place, to confer the guarantee upon the six domestic banks. Section 6(1), which is the core provision in respect of guarantees, states that the Minister may provide financial support. Section 6(4), which relates to the guarantee clause, states “Financial support may be provided under this section in a form or manner determined by the Minister”. The Minister for Finance will not obliged to provide a guarantee under this section. He or she has discretion and may provide a guarantee. That is the crucial point. If an Irish credit institution were taken over or became a subsidiary of a company from another jurisdiction, the Minister would not be obliged to continue to provide a guarantee.
It is intended, in the implementation of this legislation, to draw up the scheme that will be laid before the Houses and then complete commercial agreements with particular institutions. Within such agreements, the interests of the State in respect of the revocation of any guarantee will be fully protected.
Question put and agreed to.
Senator Alan Kelly: I move amendment No. 2:
This is a very important amendment and we hope the Minister will accept it. We would like to support the Bill and such support would be conditional upon the amendment being accepted.
The amendment refers to the “gross earnings of the Minister for Finance” and there are ways of discovering what might be those earnings. Everyone is discussing the massive earnings enjoyed by many bank executives. The executives of the six banks covered by the Bill were paid €17 million between them last year. That is a humongous figure. If we are to bail out the banks — I know the Minister hates that phrase — surely we should put in place a mechanism to ensure the massive pay and perks enjoyed by bank executives will be limited in some way.
There has been a great deal of debate regarding share options and the impact these have had on the performance of some of the executives to whom I refer and to the banks for which they work. The amendment suggests that the issuing of share options should be controlled.
This is a very important amendment. I accept it was pushed to the limit in the Lower House. However, the Minister has had time to reflect further on the amendment and I ask him to accept it. It is designed to act as a control mechanism. It would help restore a little goodwill towards the banks and show they are willing to give something back.
Senator Ivana Bacik: I support this very important amendment. As the Minister said, part of the problem we now see is as a result of a disproportionate reward of excessive risk-taking by some bankers. I accept what he said that not all bankers were reckless. However, it is clear there were bankers who were reckless and who were disproportionately rewarded. That is politically unacceptable and, as Senator Kelly said, people are very concerned about it.
If the Minister does not accept this amendment, he might tell us if it is proposed to insert in the scheme he will bring before the Houses, a measure to control the share option offers and the earnings, perks and so on given to senior officers and employees.
The Minister said it is envisaged the scheme will provide for a representative of the public interest to be placed on the boards of institutions which seek financial support. That representation might be one way to ensure controls. I ask that the representative to be placed on the boards of such institutions be a representative of the Financial Regulator.
Senator Liam Twomey: This amendment is somewhat similar to our amendment No. 4, which is not quite as restrictive as Senator Kelly’s. The important issue on which we would like to hear the Minister’s views concerns the rebuilding of capital in a bank receiving financial assistance from the taxpayer. It would be almost unethical if people received large bonuses, large dividends or whatever if the taxpayer was giving a huge loan to the institution. This is very much based on rebuilding the credit and the capital of the institution as well as for reasons of ethics. The taxpayer should not see people receive huge remuneration or bonuses while restructuring is going on.
Senator Alex White: I support those who have spoken on this amendment. A colleague made the point earlier that the issue of executive pay is a populist one and is not an objection of substance. I fundamentally disagree with that. This legislation looks likely to be passed by both Houses but the Minister and the Government will require an element of buy-in, if I can use that phrase, by taxpayers, the people who will fund or back this, whether it is a bail-out or otherwise.
The most repeated objection which people quite legitimately have to the way matters have gone is that those at the top of these financial institutions and elsewhere earn such inordinate sums of money. The issue of large bonuses was singled out by Senator Walsh, I think, and perhaps even by the Minister who said that whatever about pay and director remuneration, there would be considerable objections to bonuses. Gross annual earnings include bonuses in addition to the bottom line salary these people get. If the Minister objects to, or has this view about, inordinately large bonuses — I take him at his word — this amendment will cover that issue. It can be dealt with in the legislation. The Minister may say this is something which can fall for him to deal with in the course of the scheme and so on. However, I strongly urge him and the Government, in circumstances where they are looking for the support and confidence of the public in this very dramatic measure being taken, to include this provision and accede to the amendment.
Senator Dominic Hannigan: We are only looking for this measure to be brought in for the period of financial support which is, in effect, two years. The Minister spoke earlier about how moral hazard would be a priority for him in this issue.
In regard to share options, we are providing a guarantee to these institutions to avoid the potential to go under. There is a clear bet here if we offer share options to executives. They know that if the share price rises, they can exercise their options making personal profits and that if the share price goes down, because of their bets, the Minister and every taxpayer will guarantee their losses.
We are looking for this measure for two years. It is not a great deal to ask or that difficult to include it in the Bill. When it comes to giving maximum salaries, we could even throw in a car if needs be. This is a sensible measure and if the Minister is serious about the whole issue of moral hazard, something like this needs to be included the Bill.
Senator Joe O’Toole: It is very important we make it clear that this Bill is not to guarantee losses. It is only to guarantee those losses the banks cannot meet out of their other funds, etc. In an attempt to be helpful and recognising the county from which I come where Mr. Daniel O’Connell made a fortune out of changing names, one cannot disagree with the intent of this. We said we should do this on the basis of not trusting bankers. My only difficulty with this is that it trusts bankers. What they would do is just call it something else.
The solution to this lies in the Minister’s Department. For my sins, I chair a remuneration committee and I am a member of two other such committees. I deal with the Minister’s Department in that regard. I would be very happy if the same scrutiny were put in place through a remuneration committee established by the Minister’s Department. The Department already has one which includes the Secretaries General of the Departments of the Taoiseach and Finance. It must go through a parent Department and must have a clear set of objectives for the year, a twice yearly review of progress, an assessment and key performance indicators. On that basis, a package is agreed.
No one can walk away from what the Labour Party is trying to do. There is an intent here to which no one can object and it is about scrutiny. If the Minister said it was his intention that the remuneration package would receive the same scrutiny as the remuneration package for the chief executive of a State body or semi-State body, that would cover exactly what we are setting out to do. It would have to be approved by his Department. If we heard his Department was beginning to approve the type of bonuses to which Senator Kelly objected — we all agree with him on that — this would fall on its face.
Is the Minister prepared to insist that the same level of scrutiny, assessment, monitoring and measurement of performance indicators is put in place for the chief executives of these institutions as it is for other bodies with which he deals?
Senator Paschal Donohoe: There is much in this amendment which is important and deserves consideration. We have acknowledged at length in this discussion that there has been a casino culture in some banks and we are all dealing with the consequences of that now. The compensation packages that have been created have contributed to that.
There are two elements in this amendment which are worthy of discussion and a response from the Minister. The first element relates to the incomes some of these people receive. I have no issue if someone capable of leading a huge business enterprise is paid hundreds of thousands of euro or millions of euro. However, if there is an industry where the average income of everyone participating in it is around that mark, then there is something wrong. That is the case in many of the banks about which we are talking. Some of them are in Ireland while some are not.
People in bank departments are being paid a lot of money and the conditions in which that money is released are all about what they deliver in the short term or what happens in a quarter or in a half year. That places a focus on the short-term gain which undermines the long-term health of our banking institutions.
That said, we must picture the circumstances in which we would view the chief executives of some of these banks. If a bank was in a situation where it had to receive State support, it would be a bank in significant financial difficulty. More than likely, we would require a change in its management and a new leader with the talent and ability to lead the bank out of its difficulties. It is plausible that to get that talent we need to pay more than the Minister of Finance is paid. Although some of the banks are staffed abundantly with poor talent and poor decisions have been made, there are many good and able people within the industry. We will need to retain them for the long-term health of the banking industry. The suggestion made by Senator O’Toole is a far more realistic way of moving forward. We cannot allow ourselves to end up in a position where suitable leaders for our banks will be turned away because of a cap on salaries that is unrealistic for the type of people we need to run the banks.
Senator Jerry Buttimer: The Minister said Fine Gael did not want the support of developers, builders and bank staff. We have their support. One of our core values is the reward of enterprise. There is merit in the amendment. I support the notion that a job should be done well and I am sickened by the attitude that it does not matter. I have received ten telephone calls today from people concerned about others who are rewarded for doing a job that has not been done well. This aggravates me. We must send a message to the public through this Labour Party amendment to the effect that we will no longer condone reckless behaviour. I am not talking about middle and lower management, the ordinary bank workers who do a good job. I am talking about those who drive policy. Part of the task of the Minister is to restore confidence in the banking sector and he must send a clear and cogent message to those in charge. I urge him to take on board the suggestion of Senator O’Toole which has merit. We must rein in the people in charge of our banks.
Senator Mary M. White: It is opportune to spell out the fact that the beauty of this model is that it avoids paying taxpayers’ money up front. The scheme should, in fact, earn substantial moneys for taxpayers. Clarification in this regard would be enlightening.
Senator Paul Coghlan: On Second Stage several Members referred to the excessive remuneration for apparent short-term success in the banks. The Minister acknowledged that the success was doubtful because we know these successful managers did not provide properly and prudentially for bad and doubtful debts. They under-provided for and under-declared them. I agree with other Members that the admirable solution for the Minister would be to accept the suggestion made by Senator O’Toole.
Deputy Brian Lenihan: It is important to note the precise terms of section 6, whereby financial support can be provided in such form and manner as determined by the Minister and on such commercial or other terms and conditions as the Minister thinks fit. The legislation empowers the Minister not alone to set commercial terms, but also other terms in the arrangement arrived at with the relevant banks as he thinks fit. That discretion is provided for in the Bill. It is clear from the section that it provides ample power for the Minister in legislative terms to address the issue. It is always a mistake in legislation to include too much detail. I have piloted Bills through the House in the past and have always been struck by the fact that we are inclined to make our legislation too detailed. This is understandable and comes from our vocation as politicians.
Senator Alex White: The Minister cannot suggest this Bill is too detailed.
Deputy Brian Lenihan: We all have legitimate aspirations and ambitions and points of view we want to articulate. This sometimes leads to too much legislative clutter. There is no legislative clutter attached to this section. The Minister can go in and insist on commercial or other terms. As I indicated on Second Stage, other terms are an issue that I am determined to address. I am determined to ensure the issue relating to remuneration and the terms and context in which I dealt with it will be addressed in the legislation. The appropriate response in the context of this legislation is remuneration linked to the abusive practices.
Senator Joe O’Toole: I accept the Minister’s reference to the need to avoid legislative clutter, but the Chair will note that my suggestion avoided legislative clutter. It would provide comfort for us that the Minister would move along the lines indicated by the Labour Party amendment. One option to do this would be a remuneration committee system structured by the Department of Finance on the basis of a documented report from the higher remuneration body of eight years ago. The higher remuneration body would be another option. We want an indication from the Minister that he will return to us with such a structure. We want to know what he plans to do, without tying him down with legislative clutter.
Deputy Brian Lenihan: I am willing to entertain and examine Senator O’Toole’s suggestion. The Senator is not the most popular figure in the Department of Finance, because he is such an effective negotiator on conditions of service. That said, I will examine whether a suitable group of wise men or women can be constituted to consider the issue.
Senator Jim Walsh: I will be brief because I do not want to cause a delay. I caution against this. Any intrusion into the corporate governance of the banks could be detrimental.
Senator Ivana Bacik: This is all about corporate governance.
Senator Jim Walsh: A board of directors will have responsibility for the banks. It is not wise to ask the Minister or the Department to assume some of that responsibility. What we need is an incentivised provision which would deal with the fundamental flaw of bonuses being paid for short-term profits to the detriment of stability and medium-term prudence. Interfering in the marketplace as suggested would be detrimental to the future of the banks.
Senator Ivana Bacik: With respect to Senator Walsh, this is about corporate misgovernance. The Bill is and must be about corporate governance. What we have asked is that the Minister clarify the situation and include, perhaps in the scheme he will bring before the Houses, some conditions relating to chief executives and higher bank officials in terms of a cap on their salaries and expenses. This is a limited request.
The Seanad divided: Tá, 6; Níl, 25.
|Bacik, Ivana.||Doherty, Pearse.|
|Hannigan, Dominic.||Kelly, Alan.|
|Ryan, Brendan.||White, Alex.|
|Boyle, Dan.||Brady, Martin.|
|Butler, Larry.||Cannon, Ciaran.|
|Carty, John.||Cassidy, Donie.|
|Corrigan, Maria.||Daly, Mark.|
|de Búrca, Déirdre.||Ellis, John.|
|Feeney, Geraldine.||Hanafin, John.|
|MacSharry, Marc.||McDonald, Lisa.|
|Ó Domhnaill, Brian.||Ó Murchú, Labhrás.|
|O’Brien, Francis.||O’Malley, Fiona.|
|O’Sullivan, Ned.||O’Toole, Joe.|
|Ormonde, Ann.||Phelan, Kieran.|
|Walsh, Jim.||White, Mary M.|
Tellers: Tá, Senators Dominic Hannigan and Alan Kelly; Níl, Senators Déirdre de Búrca and Diarmuid Wilson.
Amendment declared lost.
Senator Alan Kelly: I move amendment No. 3:
Amendment No. 3, which deals with remuneration review, is a good amendment and the Minister should consider it. A provision such as this is badly needed. The Minister did not accept the previous amendment, but this amendment will allow the public to be confident that the remuneration of the various executives is being considered and assessed so that the lavish payments and perks will be monitored and the issue will not be swept under the carpet, especially as the taxpayer will be underwriting these six institutions.
Senator Ivana Bacik: I support the amendment. If the Minister is not willing to accept it, he might consider putting something similar into the scheme he is presenting before the Houses. It seems eminently sensible to have some provision for review of salaries and bonuses paid to board members and senior officers of institutions which are seeking financial support under the Bill.
Senator Dan Boyle: There is one flaw in this amendment, but it is more of an irony. The National Treasury Management Agency is one of the few sectors of the public service whose members’ own salaries are not publicly revealed, because a certain type of person must be attracted to the job owing to the specialist nature of the work. For this reason it is thought better to keep the salaries secret. It would be rich in irony if a body whose members’ salaries are not publicly revealed were to carry out remuneration reviews of other people.
Senator Paul Coghlan: That is a good point.
Deputy Brian Lenihan: I have some sympathy with the point of view expressed by Senator Boyle, but as Minister for Finance I cannot comment on the matters he has raised. I gather RTE now discloses staff salaries, but it had a similar arrangement for some time. Those were the two State bodies that were exempt.
Senator Paul Coghlan: Does that mean the NTMA will follow suit?
Deputy Brian Lenihan: As far as the section is concerned, there is——
Senator Joe O’Toole: On a point of order, RTE only reveals the salaries of its presenters. It does not reveal the salaries of its chief executives or assistant chief executives. We have been denied that information in the committees. I just want to add some clarity to the discussion.
Deputy Brian Lenihan: Now Senators know why the Department of Finance fears Senator O’Toole.
An Cathaoirleach: It is a point of information rather than a point of order.
Deputy Brian Lenihan: The provision does involve a degree of invasion of the normal commercial management of a company, which is in my view a little excessive. A more important question is the extent to which, as a result of this guarantee, there will be public interest representation on the boards of the relevant financial institutions.
Amendment, by leave, withdrawn.
Amendment No. 4 not moved.
Senator Liam Twomey: I move amendment No. 5:
This amendment provides for the regulatory authority to monitor any institutions receiving support from the State to ensure they do not engage in excessive profiteering in some other manner. One of the things people have noticed recently is that many of the lending institutions are levying new charges and surcharges on their customers to make up for the drop in profitability resulting from the difficulty in lending at high interest rates and borrowing at low interest rates. People have noticed that additional charges are being incurred. The regulatory authority should monitor institutions to ensure they do not start to levy hidden or indirect charges on customers.
Deputy Brian Lenihan: Senator Twomey has raised an interesting question and one that is worth examining. My officials are already considering, in the context of the preparation of the scheme, how the terms and conditions implemented on foot of it will prevent charges being passed on to the customer. That is the way in which we should deal with the issue.
Amendment, by leave, withdrawn.
Question proposed: “That section 2 stand part of the Bill.”
Senator Paddy Burke: Subsection (3) states: “Nothing in this Act prevents the performance by the Central Bank or the regulatory authority of its functions in relation to any credit institution.” I understand it is within the authority of the Central Bank to provide liquidity to Irish banks. The Minister stated that the problem we have run into is one of liquidity. Where does the change occur whereby the Minister takes over from the Governor of the Central Bank? Where do his responsibilities cease and the Minister’s begin? It may be argued there is no need for subsection (3) at all.
Senator Paul Coghlan: Section 2 provides that the prudential supervision by the Financial Regulator of any credit institution will not be affected by the provisions of the Bill. The Minister touched on this in his response on Second Stage, and several speakers have referred to the issue. Will he consider strengthening, where necessary, the powers of the Financial Regulator? That has become somewhat necessary. The Minister might comment.
Senator Joe O’Toole: There is an important point here which may give the Minister the opportunity to enlarge upon the functions of the regulator. In these Houses we have consistently restricted the functions and powers of the regulatory authorities — all of them — because we have never liked to “interfere with the market”, as the term is used. I have lost many arguments on this issue over the past 20 years. Is the reason for subsection (3) that the current financial authorities do not have adequate powers for the additional scrutiny the Minister has now taken on board? If so, this subsection is crucial. Otherwise, the demands we are making of the Minister could not be fulfilled by the regulatory authorities. At the same time, however, the regulatory authorities must fulfil their prudential function and monitor issues such as liquidity, which was mentioned by Senator Burke.
It is crucial that all the authorities work together. My understanding is that the regulatory authorities have indicated they are quite willing to take on additional scrutiny on the Minister’s behalf, under the terms specified by him. People should recognise that, for instance, the regulatory authorities have required the banks to have additional capitalisation to deal with speculation and so on. The regulatory authorities have, for instance, defined speculation for banking terms. Any speculative investment in housing, for instance, is deemed to have occurred where 50% of the houses have not been sold. Levels of liquidity, capitalisation and loan to value ratios must be undertaken on that basis. This work must be done, as it is done at the moment.
There are issues such as this and I want to add a question. The eighth or ninth directive from Europe on common audit standards in the European Community still has not been transposed by the Government. There are issues of quality assurance attached to that. It is very important to recognise that the Government should move swiftly on that. This would clarify the points raised by Senator Burke and ensure the role of the Minister has some checks and balances attaching to it by accommodating the European common audit standards.
Senator Jerry Buttimer: Under section 2(2), does the Minister intend to report to the Committee of Public Accounts and the Joint Committee on Finance and the Public Service or set up a separate banking sub-committee? This Bill gives the Minister major powers so there needs to be ministerial accountability.
Deputy Brian Lenihan: Regarding the Central Bank and the issue raised by Senator Burke, liquidity in the Irish financial system is provided by the European Central Bank. It assures the liquidity of the Irish banking system. The Irish Central Bank has assets and liabilities but in general provides liquidity in an emergency rather than acting as a normal provider of liquidity in the system. That emergency liquidity would be provided on a short-term basis. That is the division of responsibilities between the European and Irish Central Banks.
Senator Burke and Senator O’Toole also raised the matter of the Financial Regulator. We in these Houses enacted legislation in 2003 providing for a regulatory system which was much lauded at the time as a model of its kind, based on principles-driven legislation and the idea that the Central Bank and the Financial Regulator were in the one building with the same front and back doors so that they could share and exchange information. As Minister for Finance during these difficult weeks, I found the degree of collaboration between the Financial Regulator and the Central Bank encouraging. The fact they are in a shared premises and have a shared legal entity is helpful.
Our difficulty relates to standards rather than legislation and the extent to which the Financial Regulator enforces standards in banks. If Senators want more extensive powers conferred on the Financial Regulator to restrict lending, that is something that can be examined. When legislation is enacted in these Houses on matters such as this, enthusiasm is not always expressed for that point of view. It is in a crisis such as this that we reflect on things and perhaps see there is merit in the case. I am willing to look at the issue of regulation when this is completed. While it is important to enact this legislation and implement it in terms of the schemes and arrangements with different banks and what the State looks for in value and performance, these being the most urgent matters, and while I am satisfied the regulator and his staff work very hard, we need to reflect on how to strengthen his position. There is always a balance in those matters.
Senator Buttimer referred to my accountability under the legislation. Section 6 provides for an annual report, the duration of the legislation is two years, I am accountable to Dáil Éireann in the performance of my functions, and the Committee on Finance and the Public Service can ask to see me on any matter they wish to enquire into.
Senator Paddy Burke: Is it on the advice of the Governor of the Central Bank that the ECB provides liquidity to Irish banks? If that is the case, it is funny that the Minister has not consulted the ECB on the existing problem.
Senator Paul Coghlan: Have the Governor and the Financial Regulator not told the Minister in their many contacts and chats that in the light of recent developments, the powers need some strengthening?
Senator Joe O’Toole: I want to remonstrate gently with the Minister. It is very easy to agree in this House that we need to get a balance in terms of the stringency of the Financial Regulator. Senator Coghlan and I made an impassioned appeal in this House, with full support from all sides, when the Director of Corporate Enforcement approached the Government two years ago, at a time when he was dealing with the directors of a bank — not under discussion today — who were in some trouble, that his office be given the additional 30 staff it was felt he needed. The Department reluctantly conceded a number of extra people, that number being in single figures, but I stand to be corrected. It would be good to achieve a balance in the current structures so that the Financial Regulator can do what he needs to do with the necessary resources.
Deputy Brian Lenihan: I take the Senator’s point. There may be more ample resources following the enactment of this legislation given the amount the Exchequer should acquire under it.
On the point about the Central Bank, the Governor of the Irish Central Bank sits on the governing council of the European Central Bank, and a liaison is maintained between him and the President of the European Central Bank, Monsieur Trichet. That is the normal line of communication. The authorities at the ECB in Frankfurt were apprised of the developments in Ireland on an ongoing basis throughout recent events, and they apprised us of developments in other European countries during that period.
One of the problems in this area is that the European Central Bank can provide liquidity, and can do so at the request of our own Central Bank, but it does not operate a guarantee system for the existence or reconstruction of banks or for the protection of those who have deposits in or extended loans owing to the banks. That is an issue that will have to be examined for the future. A small state is in a very difficult position protecting financial institutions whose assets may far exceed the assets available to the state itself. In addition, in an increasingly globalised economy, financial institutions have footprints in many different jurisdictions. There is a case for a more harmonised European approach, but there is no evidence of an appetite for it materialising yet. The events of recent days may have changed perceptions on that issue.
Question put and agreed to.
Senator Liam Twomey: I move amendment No. 6:
This has been well discussed in the Lower House. It covers the situation of Ulster Bank which is not one the institutions that has been prescribed in the legislation. The Minister has commented on that but he may wish to make a quick comment on the record of the Seanad.
An Cathaoirleach: Is the amendment being pressed?
Senator Paul Coghlan: It is a very important point and I discussed it privately with the Minister between Second Stage and Committee Stage. This institution, as I understand it, is wholly licensed and regulated in Ireland. Can we have the operations of any foreign institution which the Minister may have to deal with ring-fenced, as we would need the operations of our own banks abroad ring-fenced?
Deputy Brian Lenihan: This issue was raised in the other House and I outlined the position in my reply to the Second Stage debate in this House. As this legislation is drafted and in its preparation, it was always intended to cover all credit institutions.
A credit institution is a term of art in European Union law. In theory, the legislation might apply to all EU institutions, but there is no intention for it to do so. The intention is to protect those institutions related to the financial instability, which primarily refers to the six domestic Irish banks. An assessment would need to be made of the banks based in Ireland that are owned by foreign companies. An assessment would also need to be made on a case-by-case basis of subsidiaries of Irish banks abroad and the extent to which they pose a systemic threat.
Given the asset and liability figures in this area, we must be cautious. On the one hand, Senators are questioning the size of the cushion and, on the other, representations are being received from banks to the effect that they wish to avail of our sovereign guarantee.
Non-domestic banks fall into two categories. The first consists of those that are fully established as corporate entities in Ireland and subject to regulation by the Financial Regulator, but operating as subsidiaries of foreign banks. The second consists of banks that do not have a distinct corporate existence here or clearance from the Central Bank and are not subject to our regulation. Rather, they are regulated from their home countries much as we regulate some external banks through our regulator. There is a distinction between the two categories.
Ulster Bank has made an application to the Government to be considered for inclusion on the list, which we will do having regard to the issues of the stability of the financial system and the legal advice we receive on competition and State aid matters. We will examine the application sympathetically because of its large branch office, but I cannot commit the Government on the issue at this stage.
Amendment, by leave, withdrawn.
Section 3 agreed to.
Senator Liam Twomey: I move amendment No. 6a:
Since the amendment was tabled under pressure, I would like it to read differently. It should read “to all credit institutions”. The legislation is concerned with saving our financial institutions. When I made my opening address, I referred to events in the Japanese banking sector in the 1990s and how it took Japan more than a decade to get out of the mess. At around the same time, Sweden experienced a property crash.
What are the Minister’s opinions on what will occur after the legislation is enacted? What are the potential second and third steps that should be discussed? We have heard that Irish banks are well capitalised and, according to some contributors, have become better capitalised in the few days since the Minister’s guarantee of security for all deposits. We have also been told that, due to regulations in the sector up until recently, there is a low level of debt to assets. The sticky point is something that we do not know but have been told about, namely, the low level of bad debt in the sector as a whole.
Last year, the six banks in question made approximately €6 billion in profit, a significant amount. The deposit guarantees notwithstanding, what is the chance that the Government will need to loan considerable amounts to an Irish bank? From what I have gathered during the debate of recent days, that risk is low. A sum of €10 billion would be a large loan to any institution. It could only occur if a smaller bank merged with a large bank. What are the Minister’s opinions in this regard and what does he know about the banking sector? We are second guessing. Should the taxpayer be told that a limit will be placed on the provisions, namely, that there should be no need to legislate for a loan of more than €10 billion? I wish to generate a discussion on this aspect.
Deputy Brian Lenihan: It is not my intention or that of the Government to expend €10 billion on the Irish banking system. I would be exceptionally concerned at that reference in the legislation. Our immediate task is to establish a guarantee scheme, which will result in an accrual of funds or value to the Exchequer or State in some shape or form. It will be done through the use of the Irish sovereign name.
When we go beyond that, it is true to state that the legislation contains provisions that allow the Minister to deal with emergencies. I envisage that emergencies could be categorised into two forms. The first would be a temporary emergency, a short-term shortage of liquidity that could be repaired and the State could be reimbursed. A more dangerous position would arise if a bank became permanently illiquid and unable to discharge its obligations and liabilities. The Bill contains ample options whether by way of taking shares, effective control or management. The legislation provides for a wide panoply of power for the State to act in such circumstances, but I would prefer not to explore those contingencies because they are not envisaged in the legislation. Rather, we envisage a positive outcome. Contingencies must be planned for close to them, but I am satisfied that there is ample power to deal with the contingency mentioned by the Senator.
The obsession with considering the assets and liabilities of banks is dangerous in the context of the Bill because that matter is not what the legislation is about. To realise all of the assets to which I referred on Second Stage, one would need to fire-sale the securities for the loans held by every Irish bank. It is an inconceivable chain of events, one that no Government could let happen.
Senator Liam Twomey: My main point concerned something to which Senator Ross and others referred, namely, the considerable urgency in sorting out the legislation last Monday night. We have never been given the background to the urgency. What is the Swedish model, which the Minister believes is so good that it will save our banking sector? Should we know about other concerns or is everything fine?
Senator Joe O’Toole: Senator Twomey referred to my previous comments. I have regularly discussed this matter with the regulators, who informed me several times that they are not worried about the banks collapsing on the basis of people being unable to meet their mortgage repayments. Nor are they worried about the banks’ solvency.
Traditionally, the loan to value ratio and its related liquidity were determined on the basis of a point in time. The regulators of the Central Bank would consider a bank’s experience and determine what level of liquidity was required. In recent years and uniquely in Europe, the Financial Regulator has taken a forward-looking approach to liquidity. He has considered the possible future needs for liquidity and required the banks to meet them. Accordingly, their asset levels in terms of loan to value are stronger than ever.
The current issue is that of the banks doing their ordinary day-to-day business. As the Minister stated, they must draw down short-term interbank lending, but they cannot do their business because the period is getting shorter. The net effect is that, when a shopkeeper wants to buy stock or a contractor wants to buy a pallet of blocks or a couple of bags of cement, no money is available. This is a matter of liquidity, the issue with which we are trying to deal. The cost to the taxpayer is only relevant after we have drawn down by fire-sale or otherwise whatever assets and securities a bank might happen to have. Only then would we have to meet that guarantee with hard cash. Only an extraordinary set of circumstances would bring that about. I cannot imagine such circumstances.
Deputy Brian Lenihan: Yes, and even if the extraordinary set of circumstances outlined by Senator O’Toole came to pass, the State insisted on the gradual winding down of the assets of a bank and there were a deficit at the end of that procedure, the Government has made it clear that its policy would be to levy the banks to the extent of that deficit. The purpose of this legislation is to prevent any exposure to the taxpayer. Although the figures about the relative assets and liabilities in the banking institutions and the fact that there is a cushion there were outlined in the House, the assumption should not be drawn that we will automatically have to lay our heads on that cushion. We will not.
Amendment, by leave, withdrawn.
Section 4 agreed to.
An Cathaoirleach: Amendments Nos. 7 and 8 are related and will be discussed together.
Senator Alan Kelly: I move amendment No. 7:
The Minister is given specific powers in section 5 that during the two-year period he can make regulations he feels necessary and expedite them in any way possible to execute this Act. Under this amendment we propose that instead of the Minister’s feeling it is appropriate to bring any considerations to the attention of Ministers in Government, he should bring them to the attention of the Oireachtas Joint Committee on Finance and the Public Service or any other body, as necessary. Given the wide-ranging nature of the legislation, that would be the most accountable way of bringing it to the Oireachtas so it could discuss the changes necessary from the Minister in the Houses with the people on this committee. It would be one way of ensuring any changes were discussed properly and with everyone across the Houses to ensure the Act was being interpreted and implemented in a good fashion.
Deputy Brian Lenihan: While I understand Senator Kelly’s point, these regulations must be laid before the Houses for approval in the first instance, so they are approved by the Houses. That is the key point set out in the legislation. The Senator seeks to amend this provision to provide some kind of power for the Oireachtas Joint Committee on Finance and the Public Service. However the requirement of the Minister to consult another Minister is a simple requirement that if there is a relevant other Minister, the Minister for Finance should consult him or her. Often legislation specifies that one cannot incur funds or recruit staff without the sanction of the Minister for Finance. It is a matter pertaining to the executive branch of Government and one cannot mix that up with the legislative branch.
Amendment, by leave, withdrawn.
Amendment No. 8 not moved.
Question proposed: “That section 5 stand part of the Bill.”
Senator Joe O’Toole: Issues have been raised by a number of people and I felt the Minister would deal with them. This regulation is the core of the Bill. The first amendment tonight was by the Labour Party suggesting the Bill should not come into operation until this regulation was framed and put through the Houses. Whether one agrees or disagrees with that, the thinking behind it was that this is the core of how it will operate, and fundamentally so. While it is secondary legislation, it is crucial secondary legislation. A very solid argument was made that this should be put through the Houses by the affirmative, positive process of being passed by both Houses, rather than just being laid before each House.
Deputy Brian Lenihan: These ones are. The Senator is anticipating the next section.
Senator Joe O’Toole: My apologies.
Senator Jim Walsh: I agree with the thrust of section 5(3)(c) but I wonder if there is a lacuna. Perhaps there is not but the Minister might clarify this. In an emergency which, it was found at the time, was not covered by the regulations, would section 5(3)(c) become an impediment to swift action being implemented? Could this happen in a case where secrecy might be paramount? Perhaps it would not, but I am concerned.
Deputy Brian Lenihan: No, I am satisfied that I have sufficient power.
Question put and agreed to.
Amendments Nos. 9 and 10 not moved.
Senator Alan Kelly: I move amendment No. 11:
This amendment proposes the creation of an oversight board consisting of three people appointed by the Committee of Public Accounts, these people having international financial expertise and being of similar standing in terms of such expertise, which would report every six months to the committee on the operation of the Act. The purpose is to bring in wider knowledge and expertise to oversee the unique legislation that has been put before the Houses in the last two days. This would be a good outside channel to examine how this Act performs in the duties for which it was proposed. We ask that it be supported. It is not a major ask and the Minister should support it.
Senator Liam Twomey: The Financial Regulator went on the news and said good corporate governance, transparency and structures are very important. Such an oversight group with the necessary expertise reporting back to the relevant Oireachtas committee would fulfil those criteria and be very beneficial in fulfilling this legislation.
Senator Ivana Bacik: This amendment gets to the root of the problem some of us have with the Bill. The Minister has suggested we are obsessed with the assets and liabilities of the institutions. However, it is appropriate and responsible to examine the potential exposure of the taxpayer to liability under the Bill in the terms of the guarantee scheme proposed by the Minister. While we accept and all hope that only an extraordinary set of circumstances would give rise to any real exposure by the taxpayer, we must examine the potential level of exposure. In doing this we must examine levels of assets and liabilities. Many of us would have an issue with the €80 billion cushion that was spoken of, and would see it as a gross overvaluation of the banks’ assets. It is important we examine the safeguards in the Act, and this is one important safeguard that could be in it but is not. Another would be to have a representative of the Financial Regulator appointed to the board of any institution getting financial support. Another would be for the Minister to agree to set limits on the levels of salaries and perks for chief executives and senior officials of banks. We need to see more safeguards and this oversight committee could be an important safeguard.
Senator Dominic Hannigan: This is about improving regulation and ensuring safeguards are in place. A committee of three wise people will not place an inordinate demand for funding on the Department. It is sensible to include something like this in the Bill so I ask the Minister to accept this amendment.
Deputy Brian Lenihan: Nothing prevents the annual report being examined by the Committee of Public Accounts or the Committee on Finance and the Public Service. Nothing, subject to Oireachtas Commission approval, stops those committees from obtaining expert advice or an outside assessment of the report submitted to the Houses. All that can happen. One does not need an Act of the Oireachtas to say it can happen.
Senator Dominic Hannigan: Will the Minister enshrine it in legislation?
Deputy Brian Lenihan: I do not understand this concept of an expert oversight board because I thought my expert oversight board was Dáil Éireann.
Senator Dominic Hannigan: With respect to the Minister, these matters are very detailed. No one in this House is an expert on international finance. It is imperative we get experts in to advise us on a regular basis.
Deputy Brian Lenihan: The Oireachtas has the capacity to do that.
Amendment, by leave, withdrawn.
Amendment No. 12 not moved.
Senator Alan Kelly: I move amendment No. 13:
This relates to section 6(4), which states: “Financial support may be provided under this section in a form and manner determined by the Minister and on such commercial or other terms and conditions as the Minister thinks fit.” The Labour Party amendment seeks to withdraw the word “other” or, at the very least, we would like the Minister to explain it. It suggests non-commercial terms and we spoke about this earlier in the House. To the Labour Party, this could be a dangerous proposition. If an explanation is forthcoming we will consider it but otherwise we will press for this term to be withdrawn.
Deputy Brian Lenihan: This is the amendment that seeks to provide in section 6, without prejudice to section 6(1), that the obligations of a credit institution in receipt of financial support shall include an obligation to take all measures——
Senator Alan Kelly: No.
Deputy Brian Lenihan: My apologies, Senator Kelly, I have mistaken the numbers in my brief. The section includes: “Financial support may be provided under this section in a form and manner determined by the Minister and on such commercial or other terms and conditions as the Minister thinks fit.” Of course the expression “or other” must be included because the Minister needs power in respect of prudent lending and abuse of payments to those who encourage unreliable lending. The reason the term is included is to extend the amplitude of the Minister’s powers as I outlined earlier in the debate.
Amendment, by leave, withdrawn.
Amendments Nos. 14 and 15 not moved.
Senator Alan Kelly: I move amendment No. 16:
In this section we want to see if the Minister will succumb and allow us to include a provision to help those on low incomes through the scheme set out. We want to extend the scheme so that those on low incomes can be helped through this process, that ordinary people can be helped with regard to foreclosure and that it be addressed through this process. We ask the Minister to look favourably on this amendment.
Deputy Brian Lenihan: I have examined the amendment and the issue raised is an important one. We need our community to have access to the credit and do not want people to resort to services provided by those who require high interest. Section 6(5) provides for the preparation of a scheme relating to these issues, the terms and conditions relating to the granting of a guarantee. The Minister has a wide discretion but a guarantee cannot be subject to issues such as credit for those on low incomes. This is not because it is not a desirable policy objective — clearly it is — but Senators recognise that this risks wholly extraneous factors becoming attached as conditions of the guarantee. Given the commercial character of the guarantee, it is important that the requirements be related to questions of stability, ethical standards and transparency and not to the lending and borrowing practices of the institution in its day to day work with customers. For those reasons I cannot accept the amendment.
Amendment, by leave, withdrawn.
An Cathaoirleach: Amendments Nos. 17 to 20, inclusive, are related and may be discussed together by agreement.
Government amendment No. 17:
Deputy Brian Lenihan: The purpose of this amendment is to substitute a positive resolution process in respect of the scheme for financial support to guarantee credit institutions. This amendment, signalled in the Dáil earlier this evening, reflects the importance of ensuring that both Houses of the Oireachtas have an opportunity to consider and endorse the scheme dealing with key requirements for financial institutions. The mechanism for pricing the value of the guarantee for these institutions was the terms and conditions for strengthening corporate governance, transparency and risk management. All arise in the scheme and the scheme should be approved by each House.
Senator Paddy Burke: Can the Houses amend the scheme or can they only reject it?
Deputy Brian Lenihan: The House can accept or reject it, as is the normal arrangement.
Amendment agreed to.
Amendments Nos. 18 to 21, inclusive, not moved.
Senator Alan Kelly: I move amendment No. 22:
This is a simple amendment with a major impact. Effectively, if an institution applies under this scheme it will issue shares equivalent to the amount paid by the State so there is some come back for the taxpayer, showing some faith for the role the State is pursuing.
Deputy Brian Lenihan: This is an interesting proposal and was tabled in the Dáil. The State intends to draw up the scheme, have it approved by each House of the Oireachtas and then conclude individual arrangements with each financial institution. The terms of the arrangements will be confidential because they are commercial documents.
The guarantee referred to in the Senators’ amendment is an entirely different matter. The Bill contains provisions to deal with a deeper emergency of a temporary or permanent shortage of liquidity. In the event of a temporary shortage, the Minister has power under this legislation to require the NTMA to come to some commercial or other arrangement with the party concerned or to make provision by way of funding. Were the Minister to do so, there would have to be a vote in Dáil Éireann sanctioning the expenditure and appropriation of the amount. Under this legislation, the Minister has the power to subscribe for shares in the credit institutions. The amendment seeks to make this share subscription mandatory in all cases where financial support is granted. In the case of the guarantee arrangement proposed, the State proposes to get cash, which is far superior to a share, for this guarantee.
It may be that the credit institutions would prefer to give equity or participation in their risk rather than the most valuable item of all, cash. I do not see how giving shares strengthens the guarantee but I appreciate why the Senators tabled the amendment. It deals with a grave scenario for a financial institution and there is the power to take shares. Preference or ordinary shares could be taken to take control of the company. To make it mandatory is not a desirable idea.
In Sweden it was made mandatory and there has been much talk of that model. Let us be clear about the Swedish model. The Swedes suffered a complete meltdown of their banking system and their gross domestic product fell 10%. The matter was tackled very well by the Government in Sweden. We are not there yet and the Swedish model appears always to appeal to our social democratic consciences. The Swedish Government at the time did a very good job but let us not forget the catastrophe with which it was struck. We have studied the Swedish model in our contingency planning and some of this legislation reflects it but we are not there yet.
Senator Joe O’Toole: The night was going very well but the Minister has scared the wits out of us with his “we are not there yet” phrase. I presume the Minister wants to strike that from the record immediately. He never said “we are not there yet”.
Senator Twomey asked the Minister to explain the Swedish model. In fairness to the point raised in the amendment and the question asked earlier, what happened in the Swedish model was that in the Armageddon situation where the banks did not have the cash to pay off their debts, the state was left with no choice except to take equity and ended up owning two banks which became one bank. That was the outcome of the Swedish model. That is a nightmare or Armageddon scenario. That is the way it would play out if we ever came to be at the place where the Minister said “we are not there yet”. If we are, we may all start to explain something to the people.
Deputy Brian Lenihan: Senators are so anxious to discuss these doomsday scenarios that I decided to bring them nearer to them.
Senator Jerry Buttimer: A good job was done last Tuesday.
Deputy Brian Lenihan: I did say in the other House and I will confirm it in this House that it would be the policy of the Government to follow that course in the event of a doomsday scenario. That is what one would do, obviously, because the State would want total effective control. One of the points made about moral hazard is that those who take risk in the bank should suffer in the event of failure. Of course, the shareholders are those who take the risk in a financial institution. There is no question that a true bail-out would involve bailing out the shareholders of an institution.
Senator Jerry Buttimer: What about the taxpayer?
Deputy Brian Lenihan: The taxpayer would have to be safeguarded in that situation.
An Cathaoirleach: We do not want to drag on the debate. The early shift is in and shortly the school tours will be coming in. Is the amendment being pressed?
Amendment, by leave, withdrawn.
Senator Alan Kelly: I move amendment No. 23:
This is an important amendment which aims to limit those institutions from adding more risk and taking more reckless decisions after being underwritten by this Bill. It seeks to ensure that no guarantee under this section will apply to any business acquired by an applicant after the date of passing of this Act. Once the Bill is passed, any business cannot add on more subsidiaries, if it has any, unless the Minister so directs. We discussed this matter on Second Stage.
Also, the same bank or any bank cannot add on any liability on the basis of an interest rate that differs more than 1% from the associated banks lending rate. That is an additional qualification. This is a very important amendment, on which we would like to hear the Minister’s comments, which seeks to avoid circumstances whereby these institutions can add on more liabilities after signing up to the contracts that will subsequently be put in place with him.
Deputy Brian Lenihan: The provision in the Bill which precludes the operation of the Competition Authority only relates to circumstances where there is an instability in the financial system. In all other circumstances, competition rules apply to mergers, acquisitions and businesses. It would not be normal practice in a purely commercial understanding between a bank and the State that the State would impose an obligation on that commercial entity in regard to how it conducts its acquisition of businesses.
Senator Paddy Burke: To follow on from Senator Kelly’s point, how does the Minister see the banks trading their way out of the difficulties because their problem, as the Minister has said, is one of liquidity? If no cash is injected other than getting large amounts of cash on deposit, how does the Minister see them working their way out of the difficulties? None of the banks has said it does not need the Minister’s assistance. How does the Minister see them trading their way out of the difficulty?
Deputy Brian Lenihan: Liquidity in terms of a bank is acquired through the taking of deposits or the obtaining of interest bonds, interest bearing loans or loans from other banks or the interbank market. We have to inject confidence into that market. That is one of the main purposes of this legislation where Ireland is concerned. On the liability side of the balance one also has subordinated debt but that is normally the way banks build up that side of the balance sheet. On the other side of the balance sheet, the assets side, in addition to the loans which banks have, they also have shareholders’ capital. The market has been very bearish about shareholding capital as I am sure Senator Burke is well aware from the various attempts to have rights issues in the UK in recent times. Clearly, if that degree of confidence existed for the banks to have a rights issue, the banks could undertake such an operation.
Amendment, by leave, withdrawn.
Senator Liam Twomey: I move amendment No. 24:
One of the things the Minister has been saying during the course of the debate is that he would like to see a greater involvement by the Oireachtas in the risk management of all credit institutions. This amendment seeks that those appointed to senior posts within the banking sector or the regulatory sector by Government should appear before the Committee of Public Accounts and say why they are the most suitable for the job. There should be an onus on such individuals, when appointed, to carry out due diligence functions on the organisations they are due to supervise and report back to the relevant Oireachtas committee. This would strengthen the role of the Oireachtas in the regulation of all financial institutions in which in which it has a role.
Senator Paul Coghlan: In regard to that due diligence examination which the Minister deems desirable and necessary, where he finds a shortfall in regard to management, will he look for heads or proper people to conduct the risk assessment controls and so on?
Senator Frances Fitzgerald: There has clearly been much concern about the governance of banks about which many Members in the Dáil and Seanad have spoken. The purpose of this amendment is to ensure an outside person is appointed to the risk management committee and the main company board of each financial institution that receives financial support.
The Minister may have seen the Fine Gael Public Appointments Transparency Bill 2008 which was published during the week. This Bill provides that the chairpersons or chief executive officers of statutory agencies or public bodies would appear before the relevant Oireachtas committee to answer questions relating to their experience or qualification for that role. The recommendation would be made to the Minister who could confirm the nomination to the Dáil.
This amendment takes into account the concerns expressed by many people and sets a formula for appointing suitably qualified persons to a variety of positions in the banks to ensure oversight. I am interested to hear the Minister’s views on whether this should be in the Bill at this point.
Senator Ivana Bacik: I support this amendment which goes to the heart of providing a safeguard and an adequate degree of oversight to the guarantee the Bill provides. It would address some of the concerns we have with the legislation. The Minister has already indicated he would like to see a representative of the public interest appointed to the boards of institutions receiving financial support. Will he clarify if that representative of the public interest effectively would fulfil the functions envisaged in the proposed amendment?
Senator Joe O’Toole: This amendment contains very important material. If the Minister is not prepared to accept it as drafted, he should give an indication of how he would deal with it. That bank directors are independent is a joke. The copybook of corporate governance of Irish companies is the UK Higgs report. Fifteen years ago AIB decided to be brave and appointed Mr. Higgs to its board as one of its independent directors. He promptly rode roughshod over most of the basic principles on which he had preached to the United Kingdom and Ireland in previous years, first by extending his stay on the board beyond the five or seven year period as recommended in his own report. There are no independent directors of the banks. It is a club. At least, the Labour Party amendment seeks to get people in. The boards should be dissolved and reconstituted by decent people. This is an indication of the way things go on that point.
Senator Paul Coghlan: It is a Fine Gael amendment.
Senator Alex White: I clarify that it is not a Labour Party amendment but a Fine Gael proposal that the Labour Party will be happy to support. It seems to be the minimum measure that would meet many concerns raised by others. Many of us have made the point that the Bill is a bare bones proposition with very little meat on it. Much is left to trust. We must see what will come out in the scheme. There must be a minimum gesture in the body of the legislation that meets the issues of substance raised regarding regulation. I urge the Minister to accept this excellent amendment or, as Senator O’Toole has asked, at least tell us what he proposes to do in order to reflect its content.
Deputy Brian Lenihan: This proposal is worthy of examination but if one looks at its two core ideas, there are better ways to implement it than by this legislative format. The risk assessment committee is an important issue. However, the Financial Regulator already has powers to attend meetings of such committees, to open the latch at a bank and look at risk practices. We need a more frequent exercise of that power by the regulator rather than adding it here.
In regard to the scheme and the contracts being drawn up on foot of it, there will be specific provisions to prevent lenders from engaging in abusive loans. That is a crucial issue in the implementation of this legislation in order that there will be no abuse of the sovereign status we have now attached to lending by these agencies.
With regard to appointments by the boards of the banks, the position is that the directors of these boards have fiduciary obligations to their companies. I propose, in consultation with the relevant banks, to make the case for and secure the appointment to each of these boards of someone who will act in the public interest. Of necessity, the banks all have their own charters and constitutions, articles and memorandum of association. Therefore, it would require an adaptation by each institution. I am anxious to see this happen and do not wish it to be left in the category of “active consideration”. I am glad, therefore, that Senators have pressed this point. The objectives can be achieved without this legislative format.
Senator Liam Twomey: Amendment No. 17 is very much a version of the Fine Gael amendments that I withdrew subsequent to what the Minister said earlier. It is about bringing the Oireachtas closer to what is happening in the sector. We should have a central role in the regulation of, due diligence and everything else that happens in the financial sector. Concerning what the Minister said about oversight and transparency, I am disappointed that he did not take the amendment on board.
The Committee divided: Tá, 19; Níl, 25.
|Bacik, Ivana.||Bradford, Paul.|
|Burke, Paddy.||Buttimer, Jerry.|
|Coffey, Paudie.||Coghlan, Paul.|
|Cummins, Maurice.||Doherty, Pearse.|
|Donohoe, Paschal.||Fitzgerald, Frances.|
|Hannigan, Dominic.||Kelly, Alan.|
|McFadden, Nicky.||O’Toole, Joe.|
|Phelan, John Paul.||Regan, Eugene.|
|Ryan, Brendan.||Twomey, Liam.|
|Boyle, Dan.||Brady, Martin.|
|Butler, Larry.||Cannon, Ciaran.|
|Carty, John.||Cassidy, Donie.|
|Corrigan, Maria.||Daly, Mark.|
|de Búrca, Déirdre.||Ellis, John.|
|Feeney, Geraldine.||Glynn, Camillus.|
|Hanafin, John.||MacSharry, Marc.|
|McDonald, Lisa.||Ó Domhnaill, Brian.|
|Ó Murchú, Labhrás.||O’Brien, Francis.|
|O’Malley, Fiona.||O’Sullivan, Ned.|
|Ormonde, Ann.||Phelan, Kieran.|
|Walsh, Jim.||White, Mary M.|
Tellers: Tá, Senators Maurice Cummins and Liam Twomey; Níl, Senators Déirdre de Búrca and Diarmuid Wilson.
Amendment declared lost.
Amendment No. 25 not moved.
Senator Alan Kelly: I move amendment No. 26:
This relates to subsection (15), which states:
The Labour Party wishes to change this by deleting “2009 and each year” and substituting with “October 2008 and each month”. This is an extraordinary Bill. Members find themselves in highly unusual circumstances and the Labour Party believes that if circumstances arise in which the Minister will be obliged to help different institutions, he should report on the matter on a monthly basis.
Senator Dominic Hannigan: Members are being fobbed off in this regard. There is no obligation to place a report before the House before 2009. The support period will run out in 2010 and anyone who has been involved in the preparation of reports is aware it could be months into 2009 before such a report would be received. As this could take place after July, it is possible that Members would not receive a report until after the House had broken for the summer recess. If this clause is to have any meaning, Members must receive reports much earlier than that. The Minister can understand the spirit of the clause and I ask him to consider how he might accommodate our wishes.
Senator Ivana Bacik: This is an important measure as, presumably, were financial support to be provided, this would be a matter of public record. Therefore, were financial support to be provided for an institution, it would be in the public domain. Consequently, it makes sense that if financial support is being provided for an institution, there should be a report, at least on a monthly basis.
Deputy Brian Lenihan: This is the last amendment to be tabled by the Opposition and I have one further amendment to go. In the amendment under discussion Members seek to impose a monthly reporting obligation. I am always accountable to Dáil Éireann. We are dealing with institutions which have shares quoted in the marketplace and which are subject to huge degrees of public scrutiny. Admittedly, two of them are building societies, which are not subject to the same degree of public accountability. In all the circumstances, however, a monthly reporting obligation would impose a burden that would not be consistent with the effective and efficient operation of the legislation.
Amendment, by leave, withdrawn.
Government amendment No. 27:
Deputy Brian Lenihan: This is a technical amendment required to ensure the non-registration of charges only applies to charges with secure liabilities arising under section 6. In other words, all other charges created by credit institutions will be treated in the normal way.
Amendment agreed to.
Section 6, as amended, agreed to.
Sections 7 to 9, inclusive, agreed to.
Title agreed to.
Bill reported with amendments and received for final consideration.
Question put: “That the Bill do now pass.”
The Seanad divided: Tá, 39; Níl, 5.
|Boyle, Dan.||Bradford, Paul.|
|Brady, Martin.||Burke, Paddy.|
|Butler, Larry.||Buttimer, Jerry.|
|Cannon, Ciaran.||Carty, John.|
|Cassidy, Donie.||Coffey, Paudie.|
|Coghlan, Paul.||Corrigan, Maria.|
|Cummins, Maurice.||Daly, Mark.|
|de Búrca, Déirdre.||Doherty, Pearse.|
|Donohoe, Paschal.||Ellis, John.|
|Feeney, Geraldine.||Fitzgerald, Frances.|
|Glynn, Camillus.||Hanafin, John.|
|MacSharry, Marc.||McDonald, Lisa.|
|McFadden, Nicky.||Ó Domhnaill, Brian.|
|Ó Murchú, Labhrás.||O’Brien, Francis.|
|O’Malley, Fiona.||O’Sullivan, Ned.|
|O’Toole, Joe.||Ormonde, Ann.|
|Phelan, John Paul.||Phelan, Kieran.|
|Regan, Eugene.||Twomey, Liam.|
|Walsh, Jim.||White, Mary M.|
|Bacik, Ivana.||Hannigan, Dominic.|
|Kelly, Alan.||Ryan, Brendan.|
Tellers: Tá, Senators Déirdre de Búrca and Diarmuid Wilson; Níl, Senators Dominic Hannigan and Alan Kelly.
Question declared carried.
An Cathaoirleach: When is it proposed to sit again?
Senator Donie Cassidy: It is proposed to sit today at 12 noon.
Senator Joe O’Toole: It would be appropriate to record our thanks to the Minister and his officials.
An Cathaoirleach: In regard to expressions of thanks, I will call the spokespersons. I call Senator Twomey.
Senator Liam Twomey: It is not since my days as a junior doctor that I have worked all day and all night. First, I thank all the staff.
Senator Joe O’Toole: Hear, hear.
Senator Liam Twomey: They have also worked all day and all night here. It was unexpected that they would be required to do so earlier. We thank the Minister for his commitment in this respect during the week. It is not too often that I reach across the political divide but I compliment him on what he has done this week. It was work well done and that must be said.
Senator Joe O’Toole: Hear, hear.
Senator Liam Twomey: This has been an historical occasion for all of us. I hope we will not repeat it too often. Hopefully, what we have done will make a huge difference to our financial services and that we have headed off any major crisis the Minister thought was pending last Monday that led to this emergency legislation going through the Dáil. On behalf of everybody in Fine Gael I thank the Minister very much for his work.
Senator Joe O’Toole: I wish to be associated with those remarks and, in particular, to thank our staff of the House who have done an extraordinary job in trying circumstances.
Senators: Hear, hear.
Senator Joe O’Toole: On my behalf and, I am sure, on behalf of other Members and the Minister, I convey congratulations to Mr. David Doyle and the rest of the staff of the Department of Finance who went into the bearna baoil when it was necessary to do so. They made a bold move. We are launching the measure here tonight. Let us all wish it well and all who sail in her. It is a hugely important step. The officials who were here supporting the Minister all night deserve our thanks. We recognise the work they have been doing. I ask the Minster to convey to them the thanks of our group and that of the House for doing that.
Senator Mary M. White: Hear, hear.
Senator Joe O’Toole: I will conclude with one negative comment. The Minister introduced e-Government to the Cabinet table and various attempts are being made in that respect in the Dáil. We had a fine debate here. In my subjective and biased view, it was a finer debate than that in the other House. What we passed here tonight now has to be sent physically to the far end of town, somebody has to do something with it and it has to be printed off and brought back here. It is a matter of using just a screen to track changes which should be done contemporaneously. We have four huge printing presses across the road. It is appalling that this is happening. It looks bad. It is not proper management. This work should be done in-house and contemporaneously. We should be able to see here on our screens the first version of the Bill, the changes — let us say, in red — that were tracked in the Dáil, the amendments — in blue — tabled in the Seanad, the amendments — in green — passed in the Seanad and the final version of the Bill.
Senator Mary M. White: There is the question of unemployment.
Senator Joe O’Toole: It could be printed and we would have it here. It is a very easy thing to do and I ask that it be considered. I thank the Minister for his openness and discussion tonight and I hope the Bill is a success.
Senator Alan Kelly: I would like to be associated with comments expressed by the previous two speakers. I thank the staff of the House and everyone concerned for working so late. I thank the Minister for his dedication and his departmental colleagues for their work. I wish the Minister all the best with the passing of this Bill. It is not a measure with which we wholeheartedly agreed and we ended up voting against it. To carry on the analogy of my party leader, from an insurance point of view we have taken out an insurance policy. I hope there will not be too many claims on it in the next two years and, if there are, I do not know where we all be heading.
Senator Marc MacSharry: I join others in thanking the staff of the House, the Clerk and the Assistant Clerk of the Seanad and all the staff associated with the House who have given unstintingly of their time and co-operation in recent days. I also thank the officials from the Department of Finance and other State agencies, who have given unstintingly of their time over the past week in the preparation of this most important legislation. I thank the Minster who must have had the worst week——
Senator Jerry Buttimer: He claims he did not.
Senator Marc MacSharry: ——of anybody I could possibly imagine in terms of the commitment and effort he managed to put into this and for the time that he has given us here.
Senators: Hear, hear.
Senator Marc MacSharry: I congratulate each Member of the Seanad for the spirit in which they have processed this legislation. It is appropriate as the sun shines in from Merrion Square that this legislation provides the vehicle for Government that it may steer us in these uncertain times——
Senator Mary M. White: Hear, hear.
Senator Marc MacSharry: ——to more positive economic times for our people in the future.
Senator Dan Boyle: We live in interesting times in the Chinese sense of the word. We have made a very emphatic decision here, one in which we can take some pride that we have carried out our role effectively as legislators. I thank all those who have assisted us in doing that, the staff of the House, the Cathaoirleach for his patience and forbearance, the Minister for spending all his time in this all-night session after steering the same legislation through the other House. We will wait to see the effect of it. We can have satisfaction in doing what we are meant to do in this House and hopefully in reflecting the importance of this House to the wider public. We can take satisfaction that this is why we are here and that legislation such as this is why the people have us here.
Senator Donie Cassidy: I thank everybody for their patience in bringing this legislation to where it is, namely, the leaders and Whips of the groups, the staff of the offices of all Senators and everyone concerned. We are deeply indebted to the Clerk of the Seanad, Deirdre, and to Jody and their staff for making the facilities available here when this legislation had to go through. I thank the Cathaoirleach for what he has done to help me during the entire evening and into the morning which it now is.
The Minister, Deputy Brian Lenihan, excelled. He has been dealing with this Bill for 21.5 hours between taking it in the Dáil and in the Seanad. The House has been sitting more than 21.5 hours from the start of the Order of Business this morning. It is an historic day. It is something that had to be done in the national interest. I deeply thank everybody here for their understanding and co-operation.
Senator Frances Fitzgerald: I thank the staff, particularly our own staff, and all the staff who work in Leinster House for their support this evening, which was essential. I thank the Minister for staying here with us all night and his officials for all the work they have put in.
It is an historic occasion. It is the first time that all Stages of a Bill have been passed after midnight in this House, emphasising the importance of the legislation and its importance for the economy. We hope for the very best for our people and for our economy from this legislation. We hope sincerely that it does the job it is intended to do and restores confidence. I thank especially the spokespersons from each of the parties who have carried the brunt of this legislation in the House tonight. I thank the Cathaoirleach for the way he has conducted affairs tonight and the time and space that has been afforded to all of us during the course of this debate.
Senator Pearse Doherty: I, too, want to be associated with the expressions of thanks to the staff in the Seanad and throughout the House who are working here early in the morning because the House sat through the night. I thank the Minister for paying attention to what was said during what was an extremely healthy debate. I am glad I was able to support the Bill, which is in the national interest. However, I harbour a number of reservations. I hope the consensus among the parties evident during the debate can be replicated when the scheme is presented to the House. It is important the Minister takes on board the views expressed by Members and ensures that these are reflected in the scheme. I thank the Minister and his staff for their attendance.
Senator Alex White: I join previous speakers in thanking the Cathaoirleach, colleagues on all sides and, in particular, the staff for their efforts during what has been a very good debate. The Minister has not been as accommodating as I would have wished, but he listened to and dealt with our comments with his usual professionalism, care and attention.
The Leader and Senator Doherty stated that the legislation is in the national interest. At the risk of disagreeing with them, I am of the view that all legislation passed by the Houses is in the national interest.
Senator Ciaran Cannon: I echo the sentiments expressed by previous speakers. This is an historic occasion, not only in the context of the hour at which we are concluding our business but also in respect of what the Oireachtas has achieved during the past 48 hours. Effectively, we have secured the Irish banking sector and also the economy. The Minister made a bold and decisive move and the support the Bill has received in both Houses is an acknowledgement of that fact. I thank the staff who were involved in facilitating the debate in the Seanad, in drafting the legislation and in assisting the Minister during the past two day.
An Cathaoirleach: Before calling the Minister, I wish to thank the Leas-Chathaoirleach, Senator Burke, the Clerk and Clerk Assistant of the Seanad and the staff of the House, the restaurant staff — who remained loyal to us right throughout the night — the staff of the Bills Office, the various other members of staff and Members for their help and co-operation in ensuring the Bill was passed.
Minister for Finance (Deputy Brian Lenihan): I join in the tributes paid by the Cathaoirleach and Members to the staff of the Houses of the Oireachtas who enabled us to function throughout the night. I refer to both the staff of the Seanad and other members of staff who have been of great assistance to us in completing our business.
I pay tribute to certain officials associated with the preparation of the legislation. I have had the opportunity to work closely with officials in my Department for some months. A number of them are specialists in this field and have provided great assistance. I also pay tribute to the officials of the National Treasury Management Agency, the Central Bank and Financial Services Authority of Ireland and the Financial Regulator who were of great assistance. I thank the Attorney General and his staff who were very involved in dealing with this matter from before the Cabinet decision to proceed with the introduction of legislation on Tuesday.
I am always struck by the professionalism and integrity of our public service. When initial difficulties arose in the banking sector in early September, it was necessary for my officials and I to take a number of individuals into our confidence in order that we might make a balanced assessment of what was required. I am extremely impressed that those confidences, which are extremely important aspects of attempting to deal with a crisis such as that with which we were faced, were never broken. I pay tribute to the professionalism and high standard of care displayed by public servants in respect of their work.
I thank Members for the considerable attention they paid to the Bill during the night and into this morning. A Sheanadóirí, gabhaim buíochas ó mo chroí libh go léir ag bánú an lae seo.
Question put and agreed to.
The Seanad adjourned at 8.05 a.m. until noon.