Report by Interdepartmental Working Group on Mortgage Arrears – Statements

25th October 2011

I welcome the Minister of State and the openness of his intervention. I am certainly no expert on this subject, but I believe it is one that goes to the heart of every household. It is, therefore, a burden we must all share. In finding a solution, we must work together.

In my reading of the Keane report, I did not see definitive solutions for distressed homeowners. The report raises more questions than it provides answers. It has left me with the distinct feeling that the balance has been struck very much in favour of the banks, which is why I welcome the Minister of State’s comment that we need to consider other solutions and reports. The report falls short of addressing the overall debt crisis, which is desperately needed.

I have some specific questions on which I seek clarification. The mortgage-to-rent scheme has been recommended as one of the tangible supports needed for distressed homeowners with unsustainable mortgages. The introduction of two mortgage-to-rent schemes was referred to. One envisages utilising an approved housing body, otherwise known as the housing association. The Minister of State outlined that the idea would be for the housing association to buy properties from mortgage holders at a discount on the current market value. The report does not set the level of discount, but the equivalent scheme in the United Kingdom refers to 90% of current market value. The mortgage lender would provide a 75% long-term loan for the housing association, secured on the property. The Department of the Environment, Community and Local Government would provide the remaining 25% equity. The mortgage holder would pay, or partly pay, the mortgage with the proceeds of the sale. This would obviously involve some write-down of the outstanding mortgage, but the report does not specify whether the debt would simply be written off by the bank or whether the mortgage holder would still be liable. Perhaps the Minister of State will clarify that aspect for me. The mortgage holder would stay in the property as a social housing tenant, paying differential rent to the housing association, with the Department of the Environment, Community and Local Government paying up to 80% of the market rental figure to the housing association.
I welcome the Minister of State’s comments, but my concern about the specific mortgage-to-rent option, which forms part of my overarching concern about the report being limited in its recommendations and conclusions which result partly from the working group not consulting representatives of wider society or the organisations on the ground responsible for implementation, is that it places a considerable financial risk on the housing association which would have to borrow large sums to run the scheme. If the mortgage-to-rent scheme is to become a reality, it is imperative that a formal consultation process with the housing association sector be embarked on first and that the sector be meaningfully involved in setting up the scheme. Will the Minister of State provide an assurance that such a formal consultation process will be put in place before the setting up of the scheme, given that housing associations are effectively being asked to borrow money to remove large property debts from the balance sheets of the banks?

I share the concern of many who have stated the recommendations are narrowly focused and do not address the personal debt problem. I refer to mortgages. As the Minister of State outlined, we need a more holistic all-debt approach that recognises that the mortgage arrears problem is part of the overall personal debt crisis which is crippling tens of thousands of people. I was looking at the proceedings of the Joint Committee on Finance, Public Expenditure and Reform on the monitor last Wednesday when representatives of MABS said they could not separate mortgage debt from other forms of personal debt because 91.5% of people contacting its offices with mortgage debt concerns were also overwhelmed by personal and other household debts. It is for that reason MABS suggested it be bolstered by the addition of 100 advisers instead of creating a 100 personnel-strong mortgage arrears agency, as proposed in the Keane report.

I join the Minister of State in saying we need to redouble our efforts, as we must all be part of finding a solution. I ask the Minister of State to encourage all relevant Departments to consider the nine principles to overcome personal debt proffered by FLAC and other national front-line organisations dealing with mortgage arrears, personal debt, poverty and housing rights. The report should be viewed as a useful framework to shape a policy response. The solution to the overall debt crisis will have to be arrived at in one way or another. In the interests of cost-effectiveness, both social and economic, like all present, I believe we need to arrive at it sooner rather than later.

Statements on Finance

6th October 2011

I thank the Minister and welcome him to the House. I like the way he tells it the way it is but I do not always like what he tells us. He is in the midst of budget preparations and I would like to take this opportunity to remind him of child benefit payment. Child benefit is based on the principle of horizontal equity and is about income distribution from those without children to those with children, because many of us will benefit through our pensions from those children when they grow up. It cannot be looked at simplistically. Often it is proposed to tax or means test child benefit but as the Children’s Right Alliance has proved, this would be a very costly administrative exercise and the previous Government eventually came around to this position. I can provide the Minister with much research on this from the UK and other countries. Will the Minister confirm that child benefit payment should remain universal and paid equally to all children? As the Supreme Court stated, child benefit is children’s money and it should be paid equally to all children and not taxed.

Child poverty increased to 9% in 2009 from 6% in 2008 and is expected to increase again. Will the Minister pay particular attention to not reducing vital budgets such as child income supports and services for vulnerable children? Perhaps I will be able to speak more to the Minister about this on another opportunity.

Twenty-Ninth Amendment of the Constitution (Judges Remuneration) Bill 2011- Second Stage

21st September 2011

I thank the Minister and I greatly appreciate the openness in his approach to his work. I will make a brief point on the national vetting bureau Bill, which was mentioned by Senator Bradford. I welcome the Minister giving us some holiday work and I welcome his office being so open with regard to the questions I have had on the Bill. I thank the Minister.

To turn to the Bill before us, I welcome the Minister’s initiative to introduce constitutional and legislative mechanisms through which judges’ pay can be reduced in line with that of other public sector employees. It very much echoes public feeling, which the Minister has caught, and it is good that we will put this to a vote of the people. I wholeheartedly agree it is imperative to ensure that no echelon of the public sector or Irish society is immune from contributing to the betterment of the public finances. I hope a similar principle of fairness and proportionality is adopted by other Departments in their considerations for the budgets for 2012 to 2016.

Like the Minister, I commend the recently appointed Chief Justice, Susan Denham, on her decision to forego the €38,000 pay rise she is entitled to as Chief Justice until the issue of judges’ pay has been resolved. Nevertheless, I echo the concerns of a number of leading academics, practitioners and the Judiciary itself with respect to the implications of the proposed amendment as formulated on judicial independence, which forms part of the bedrock of the doctrine of separation of powers in Ireland. In its recent response to the Bill, the Judiciary maintained it is not opposed to the holding of a referendum on judges’ pay but rather with how the salary reduction should be achieved with the least interference with the principle of judicial independence. Presuming, and with no doubt about, the sincerity of this contention I ask the Minister to explain why the Bill does not incorporate a safeguard whereby a decision regarding judicial remuneration and a reduction in judicial pay is taken at least on the advice of an independent body.

In light of the debate raised about judicial independence, I also ask the Minister whether he intends to move on his previous commitment to review the system of judicial appointments.

These are the two questions I would like to put to the Minister. I will support the Bill but I ask that the Minister addresses my questions.