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Leaders' Questions (Continued)

Tuesday, 2 July 2013

Dáil Éireann Debate
Vol. 809 No. 2

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(Speaker Continuing)

[Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin] One only has to talk to those in the small business sector to realise their frustration at the lack of any engagement with the Government on policies that could have a real impact. Added to that, the cut in child benefit and, above all, the continuing failure to deal with a growing mortgage crisis, which is acting as a millstone around our economy, are causing paralysis. That problem has become progressively worse and many people in mortgage arrears are simply not in a position to spend in the real economy. All the Government has done is to give more powers to the banks to put more pressure on many such families. As a result, consumer spending has fallen significantly. It has gone through the floor, falling 3% in one quarter, which is the biggest quarterly fall since the recession began.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett A question please.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin What does the Taoiseach and Government intend to do about this situation, given that the existing policy programme being followed is clearly not working, either at EU level or domestically? Domestic demand is flat and consumer spending continues to fall. The strategy is not working, so I would like the Taoiseach to outline to the House what he intends to do about it.

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny The Minister for Finance, Deputy Noonan, has dealt with this on a number of occasions. I have just returned from briefing the European Parliament in Strasbourg in respect of the conclusion of Ireland's Presidency. In a situation where 26 million are unemployed across the EU, and with youth unemployment now reaching 60% in a number of countries, it goes without saying that other countries are facing really challenging difficulties.

The CSO figures mentioned by the Deputy are not consistent with the tax figures which will be produced later this afternoon. They will clearly show that the profile is on target - the budget having been predicated on a 1.3% growth rate - and that tax returns are actually ahead of profile. The difficulty with the figures that Deputy Martin mentioned is because of a fall in exports and the irregularity of the way that aircraft leasing, and the aviation business generally, works. Clearly, other countries are not in a position to be as strong in terms of their purchasing power as heretofore and this has affected Irish exports.

The indigenous economy is being stabilised. As I have often said before, in Ireland we lost 7,000 jobs a month for three years. That has been halted, however, and 2,000 jobs a month are now being created in the private sector. In that regard, it is disappointing that while these figures emerge they are not consistent with other figures that will be produced later this afternoon.

In respect of mortgages, the Deputy's own admission yesterday about his Government's failure to regulate banks was a central feature and contributory cause to the situation in which so many thousands of people now find themselves. The Government has put in place a range of actions to deal with mortgage arrears for people who are struggling to pay their mortgages. There has been a rebalancing between the rights of borrowers and lenders under the biggest shake-up in the personal insolvency laws in a century. We have given those who bought their first homes during the bubble period significant increases in mortgage interest relief.

All of the tools are in place to accelerate the work-out of the mortgage crisis. My understanding is that 25,000 offers have been made by banks to people who are in mortgage distress. Banks and borrowers need to use these tools to reach fair and sustainable solutions to mortgage arrears on a case-by-case basis. We cannot leave 100,000 families locked in this particular limbo.

In the first quarter of this year, 24,706 new restructural arrangements were agreed. Of those, 33% were interest only, 21% were reduced payment, 17% were term extension, 15% were arrears capitalisation, 8.9% were reduced payment, 3.1% were payment moratorium, 0.3% were permanent interest rate reduction, 0.2% were split mortgages, 0.2% were temporary interest rate reduction and 0.2% were deferred interest schemes.

These targets have been set as a consequence of the Government requiring the regulator to do this. The targets will accelerate the mortgage crisis work-out. Nobody wants to see this happening but it is a legacy of an unprecedented scale of problems that the Government has been working on for quite some time. The mechanics and tools are all there. We expect that the regulator, who is the licenser of the banks, will see to it that they live up to the targets and objectives that are set, and that people can have sustainable exits from the mortgage crisis in which they find themselves.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin I thank the Taoiseach for his response, but I am somewhat concerned about what is almost a denial by him of the CSO figures. The Central Statistics Office is an independent organisation that has given us the figures that show the economy is back in recession. There is no other way around that. I do not know if the Taoiseach is correct in saying that it is not consistent with tax figures, but the public know all about tax figures. They are feeling the pain of regressive taxes. In many respects, it is the wrong timing. The nature of taxes the Government has imposed has sucked continuing demand out of the domestic economy and has inflicted considerable pain on many families across the country.

People will find incredible the Taoiseach's statement that there has been a rebalancing of rights between borrowers and lenders. His suggestion is that this is to the benefit of borrowers. There has been a rebalancing all right, but it has been totally in favour of the lenders, that is, the banks. Many people are fearful of the impact on their family homes as a result of the rebalancing that has resulted in making it legislatively easier for banks to repossess houses and, indeed, diluting the code of conduct in respect of consumers so that banks can behave more aggressively towards many average families.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett A question please.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin Furthermore, one only has to look at the retail sector to know the scale and the degree to which the domestic economy is on the floor. I have heard nothing in the Taoiseach's reply that gives any hope or sense of a coherent plan to get the domestic economy back on track.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett The Deputy is over time.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin Over the last two or three years, the Government has consistently underspent its capital budget. The Government keeps delaying expenditure on, and thus reducing, what was already a reduced capital budget. The Taoiseach could quickly rectify that to create some demand in the economy and job opportunities. Will the Taoiseach commit to review his approach fundamentally to the domestic economy?

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny I said it was disappointing that the CSO figures did not correlate with the tax returns and receipt figures which will be out later this afternoon.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin No. The Taoiseach did not say that at all. He is inconsistent.

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny Those figures will show that the profile is on target in the context of how the budget was set out.

  The domestic taxes to which Deputy Martin referred do not impact upon exports. The problem for GNP has been in respect of exports where other countries have greater difficulties and face a series of challenges themselves. They are probably not in a position to buy as much of what we produce as they would normally do.

Deputy Micheál Martin: Information on Micheál Martin Zoom on Micheál Martin What?

The Taoiseach: Information on Enda Kenny Zoom on Enda Kenny Let me repeat for the Deputy that in regard to mortgage accounts, some 79,689 were categorised as restructured at the end of March 2013. Of those, 53% were not in arrears at the end of quarter one. As a percentage of the total stock in arrears, both early and 90 days plus, 37,454 - or 26% - were classified as restructured. That does not suggest that 47% have fallen back into arrears. Restructured accounts in arrears include accounts that were in arrears prior to restructuring and where the arrears balance has not yet been eliminated, as well as accounts that are in arrears in the current restructuring arrangement.

New data collected for this quarter indicate that 76% of restructured PDH accounts were deemed to be meeting the terms of their arrangement. Deputy Martin himself admitted the other day that the Governments of which he was a member failed to deal with regulating the banks. The light-touch regulation, which became a feature as a policy issue, was a real contributing factor to people having to have inflated mortgages for inflated prices which drove them into this difficulty in the beginning.

The Government has been working assiduously for quite some time to put through the legislation and put in place the mechanism and tools both for borrowers and lenders in order to deal with this.


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