National Asset Management Agency
Private Members’ Business
Northern Ireland Assembly debates, 28 September 2009, 12:45 pm
William Hay (Speaker)
The Business Committee has agreed to allow up to one hour and 30 minutes for the debate. The proposer will have 10 minutes in which to propose the motion and 10 minutes in which to make a winding-up speech. All other Members who wish to speak will have five minutes. One amendment has been selected and published on the Marshalled List. The proposer of the amendment will have 10 minutes in which to propose and five minutes in which to make a winding-up speech. All other Members who wish to speak will have five minutes.
Jennifer McCann (Sinn Féin)
Go raibh maith agat, a Cheann Comhairle. I beg to move
That this Assembly expresses deep concern at the possible negative economic consequences for the island of Ireland if the National Asset Management Agency legislation currently under consideration by Dáil Éireann is passed; and calls on the First Minister and deputy First Minister to raise the issue at the North/South Ministerial Council to agree a way forward regarding these assets which will ensure the economic stability of the island of Ireland and movement towards economic growth.
This motion highlights a number of concerns for both the North and the South that would be realised should the legislation for the national asset management agency (NAMA) be passed, and it calls for an all-island approach to be taken on the issue.
In legislative terms, the Irish Government’s proposal is seriously flawed. It plans to pay the banks’ long-term economic valuations for bad loans, as opposed to the current market value. That is a bad deal for taxpayers. The additional recapitalisation that would be needed subsequent to the establishment of NAMA means that taxpayers would pay twice for the bank crisis and would still have no real control over the sector.
Even when bad loans are taken off banks’ books, there is no guarantee that banks will provide normal lending in an economy that is starved of credit. Historically, banks are quick to lend during a boom, but slow to lend during a recession. Therefore, it is irresponsible to take losses for banks without ensuring an element of control of banking practice.
The main reason to oppose NAMA is the fact that it is a plan to rescue banks and developers. It does not help ordinary homeowners and businesses who face repossession and economic hardship throughout the length and breadth of the island. They must continue to pay their debts, while developers’ bad loans are put on ice indefinitely.
The legislation will also have an impact on the North. As I have said, it affects people throughout the island of Ireland. Although taxpayers in the South will be hit hardest as banks sell off their bad loans to the Government, €5 billion-worth of those assets are located in the North. When they are sold off, that will affect the value of property and land here.
The Irish Government will have to recoup their expenditure in some way. With no definite time frame for the sale of those assets being built into the proposals, the release of that property into the market at discount prices over a period will have an adverse effect on the recovery of the economy here. Minister Wilson has said that he has been given assurances by the South’s Finance Minister; we in Sinn Féin want to know the details of those assurances. If the economy in the South goes further into free fall, nothing will stop the quick release of those assets into the market.
There is a strong argument for NAMA to be put before the people, and my party believes that that should be done by way of a referendum. The focus for many people has been the price that NAMA will pay for toxic loans that it will transfer from the banks onto the taxpayer’s balance sheet. That long-term economic value benefits only the banks’ shareholders, as the long-term viability of those loans is seriously in doubt due to the oversupply of property and the overinflated value of loans.
NAMA is incapable of meeting the twin objectives of achieving the best value for taxpayers and exposing them to the least possible risk. The debt to which NAMA will expose taxpayers could be in excess of €70 billion. As I have said, €5 billion-worth of that property and related assets are located in the North.
The legislation contains numerous problems, not least of which are the reliance on banks to act in good faith by giving all information on loans to NAMA and the reliance on the ability of NAMA to work with developers to finish projects, potentially lending them taxpayers’ money to do so. There are also operational concerns that NAMA will not have the expertise to reclaim debt as it is not used to working in that sphere and the staff that it recruits may still be loyal to their former bank employers.
NAMA will have a huge government cost — the staffing requirement of 50 may well be an underestimate — at a time when other organisations of significant public importance are being amalgamated and rationalised. As regards the notion that a levy will be introduced on banks if NAMA makes a shortfall, we do not know how a shortfall will even be defined, much less what the levy would be.
The Government also says that cleaning out banks via NAMA will bring a return to normal bank practice and lending. However, that rests on the assumption that private banking practice is interested in restoring the economy through providing credit, rather than being concerned only with the interests of shareholders. We must ask whether banks will lend when they have managed to get their hands on cash via NAMA-issued transfer bonds.
Banks do not tend to lend to businesses that they consider to be risky. We have also seen that problem here, with banks that sometimes do not lend to small and medium-sized businesses because doing so might create another set of dubious assets that would impair their loan books. That is what NAMA is trying to rectify. As I have said, historically, banks lend too much money, too easily, during booms, and too little money, too cautiously, during recessions.
The creation of NAMA will not provide any positives that could not be delivered through nationalisation. If it was used as a state property management company, NAMA would have potential. If it was used as a property management company, the state could utilise land seized on defaulted loans for vital infrastructure, social housing provision or tourism development. We now have a situation in which people throughout the country are sitting in their homes and business premises in negative equity, or, worse, are being evicted because their property is being repossessed.
The property managed by NAMA should be available to local authorities to house people who are evicted as a result of banks moving against them. However, the NAMA-owned property, paid for by taxpayers, is to be managed by private development companies, and tenders have already been put out to attract such companies. That measure is designed to keep party members on board rather than improve the legislation.
NAMA has nothing to do with improving Irish society. The ultimate point of it is to socialise debt and privatise profit. There needs to be an agreed way forward based on an all-island approach. If the NAMA legislation is passed in its current form, there will be serious implications for the economy of the island as a whole. The nationalisation of banks is a much more viable alternative, which would protect the interests of the taxpayer and create a working system of banking.
All of that illustrates the weakness of not having joined-up economic planning across the island. An all-Ireland economic summit is required to address the urgent need for a joined-up economic approach. Go raibh maith agat.
Stephen Farry (Alliance)
I beg to move the following amendment: Leave out all after “consequences” and insert
“for Northern Ireland arising from the potential National Asset Management Agency legislation currently under consideration in the Oireachtas; and, while respecting the right of the Irish Government and Parliament to determine their own response to the banking crisis within their jurisdiction, calls on the First Minister and deputy First Minister, alongside the Ministers of Finance and Personnel and Enterprise, Trade and Investment, to use all opportunities, including the North South Ministerial Council, to ensure that the potential implications for the economy in Northern Ireland are fully taken into account within any legislation and subsequent action.”
I welcome the debate. The legislation in the Republic of Ireland is significant and comes at a very interesting time for politics as a whole in the Republic of Ireland. Given that there are implications for Northern Ireland, it is only right that the Assembly discusses it.
We tabled our amendment to focus the debate on the real interests of Northern Ireland and to avoid an inappropriate widening of the discussion. We have to respect the right of the Irish Government and the Oireachtas to determine their own internal economic policies. We may all have personal viewpoints on NAMA, but the primary response to the banking crisis in the Republic of Ireland is for Irish elected representatives to determine. That does not mean that the Assembly should look inward: on the contrary, it is important that we are outward-looking as far as possible and that we are prepared to comment on national, all-island, European and international affairs, particularly, but not exclusively, when they impact on Northern Ireland.
In doing that, it is important that we recognise and respect our own competencies as an Assembly and, more importantly, that we recognise the competencies and responsibilities of other Assemblies and Parliaments. That also applies to electorates. For example, I would love to be in a position to call for a “Yes” vote in Friday’s referendum on the Lisbon Treaty. However, as an elected representative in Northern Ireland who sits in a Northern Irish Assembly, I know that that would not be appropriate.
In particular, we need to be very careful that the Assembly does not become a surrogate for fighting battles that should really be taking place on the Floor of the Dáil Éireann. Therefore, our focus should be on trying to influence the legislation in a manner that addresses and contains any of the potential implications for Northern Ireland and our economy.
The NAMA approach, or something similar, may be the least worst of all the options facing the Irish Government. I respect the views of others, including those expressed by Sinn Féin today and those expressed within my own group that are different to my own, but that is not the issue for us today. We can all be populist and want to give the bankers a good kicking, which they richly deserve, no doubt. However, being responsible, we cannot escape acknowledging that a healthy and functioning banking system is fundamental to any economy. Like many other countries around the world, and perhaps particularly so given the scale of the problem, Ireland has to get its banking system moving again. We can point to examples of rescue schemes around the world, which have variable shapes and outcomes, such as the TARP scheme in the United States, our own national scheme and the one in Germany.
In order to address their banking and financial crisis, the Irish Government have to address the so-called toxic loans that are in the system. They are proposing to use €54 billion to prop up related loans that have a nominal book value of €77 billion. Those loans are currently valued at €47 billion. Is that the right balance of pain between shareholders and taxpayers? With the discount, will the assumption of a rise in value of those assets be sustainable? Have the right underlying calculations been made? Will the banks, as Jennifer McCann said, follow through and begin to lend again? Will the gamble work?
Those are interesting questions, but, again, our concern must be the impact of NAMA on Northern Ireland. We have to assume that that legislation will be introduced, and then ensure that we mitigate any effect that it might have on Northern Ireland.
From our perspective, we have to recognise the cross-border effects of that legislation. We do not live in a world of closed economies. Rather, we live in an open, integrated and globalised economy, and what happens in one economy can have knock-on effects elsewhere. Decisions taken by national governments have much wider implications and effects. The Irish Government’s act of economic nationalism in guaranteeing deposits in their own national banks last year had implications across Europe and a ripple effect on the security of deposits elsewhere.
This issue indicates the realities of a growing all-island economy. I would not overstate it to the same extent as Jennifer McCann, given that we are clearly very fiscally dependent on the UK Exchequer — and, indeed, more so today — but there is clear evidence of growing integration on the island of Ireland, and it is important that we discuss economic interests of mutual concern and avoid negative impacts on each other’s economies.
Our big concern is about the impact of a fire sale of NAMA-backed assets in Northern Ireland, and the impact that that would have on our economy. It is estimated that 6% of the assets that would fall under NAMA are in Northern Ireland. Other NAMA assets are also internationalised, with about 21% in GB, 3% in the United States and about 4% in the rest of Europe. However, the impact if things went wrong would be much greater here given the relative size of our economy compared with those other, much bigger economies. The level of our exposure equates to a notional value of about £4·6 billion. However, we are still uncertain about what the impact on Northern Ireland will be. It is important that we do not over-react or panic at this stage. Although a fire sale would be extremely damaging to our property market and wider economy, there is no suggestion at this stage that that is what NAMA would seek to do.
We must do a number of things. First, we must remain vigilant to the risks, but not overplay them; secondly, we must seek to influence the legislation as best we can; and, thirdly, we must appreciate that there are individuals in Northern Ireland who will be mixed up in this, whether property owners or people who work in the related banks.
I note that our Finance Minister has already had discussions with Brian Lenehan, his counterpart in the Republic of Ireland. I also believe that the matter was discussed by the North/South Ministerial Council. It is right that those discussions continue. I would encourage a place being made available for a representative of Northern Ireland, or for someone who has an intimate knowledge of the Northern Ireland economy, on a NAMA advisory board. That would be a good way to protect our interests.
This debate is critical. We must recognise our role as an Assembly and make our points while respecting the rights of others to take decisions about their own economy. In turn, however, we must take this issue seriously but not over-react. There is a lot of work to be done in the coming months. I look forward to hearing the comments of our own Finance Minister, and I wish him and his Executive colleagues every success in trying to ensure that the effects of the legislation on Northern Ireland are minimised as far as possible.
Peter Weir (DUP)
I welcome the debate. As a politician, it is, in part, always good to talk about bankers, because in recent days, they are, perhaps, the one group of professionals that tend to be held in lower esteem than politicians. Consequently, the opportunity to distract from our bad press is always welcome.
Although I disagree with the wording of the amendment, Dr Farry hit the nail on the head. We need to focus on what the Assembly can do and determine our appropriate role. In that respect, I fundamentally disagree with the motion’s approach, because I do not believe that it is appropriate for the Assembly to interfere in what is essentially a turf war down South between Fianna Fáil and Sinn Féin and in legislation in another jurisdiction.
Some people would criticise the Assembly for not giving sufficient scrutiny to its own legislation. Therefore, it is a somewhat expansionist approach to suggest that we should interfere in legislation in the Irish Republic. To that end, some colleagues and I find ourselves in the unusual position of being defenders of Irish sovereignty today. We are a different jurisdiction, and it is not our role to interfere in the internal affairs of another country.
When I read the criticisms of NAMA in the motion, I wondered whether Sinn Féin had become nervous about the link-up between the Ulster Unionists and the Conservatives and had sought to reposition itself on the right of the Ulster Unionist Party by saying that the level of state interference in the banking sector is terrible and by proposing a free market solution. However, when I read the detail, I understood, less surprisingly, that Sinn Féin’s position is to nationalise banks. Indeed, I suspect that it is keen to nationalise everything. At least one Member on the Sinn Féin Benches seems to be giving a level of tacit support to that assertion.
The nationalisation of banks is similar to the situation in Russia in the first part of the twentieth century, whereby lands were nationalised, and the kulak class was eventually eliminated. That shows the retrograde thinking of Sinn Féin on that issue. The evil corporatists have to be faced down.
Peter Weir (DUP)
There is a fundamental difference between nationalisation of banks and an asset management system. I appreciate that the Member would be keen to go further, and I expect that to be reflected in the Conservative and Ulster Unionist manifesto.
We should focus on the implications for Northern Ireland and what the Assembly should do about them. Not surprisingly, I take exception with the proposers of the motion, who consider an all-Ireland economy as the solution to all problems, particularly down South. If we can learn one lesson from the financial position down South, it is that we were wise to steer clear of the charm offensive that was thrust in our direction, from the public and from some nationalist parties, which consistently wanted Northern Ireland to have much closer economic ties with the Republic of Ireland. It is clear that the Celtic tiger that once pranced about this island with great pride and no degree of smugness has been shown to be drinking at the pool of toxic loans. Indeed, a closer alignment with the Republic of Ireland would have left us shouldering a large amount of the debt.
The proposer of the amendment reflected fairly accurately that there has been some wild speculation about the amount of money that is involved in assets in Northern Ireland. It totals just under €5 billion of NAMA’s overall base of €77 billion. As has been mentioned, that must be put in perspective. It is clear that the scale could have huge implications for the Northern Ireland economy. However, we must also be sure that we do not overreact. We must take a co-operative approach and keep a close eye on the level of direct discussions about any implications for Northern Ireland. I would not go as far as the proposer of the amendment, who wants an economic expert for Northern Ireland to be part of the panel.
Mr McNarry’s name was suggested in that regard; we had a brief discussion beforehand, and I think that he would be willing to sacrifice himself to serve such a purpose. Whether the Assembly can spare him is another matter, but his expertise should be shared with the Republic of Ireland.
In practical terms, however, we do not believe that this is best done through high-level summitry, or, indeed, the North/South Ministerial Council. It is better that the Finance Minister work on the detail of the implications of the situation with his opposite number and with officials on a bilateral basis. It is clear that a fire sale is in no one’s interests; that is the main concern for many of us. That work has started and is ongoing; that is the route that we should be taking, rather than trying to set up structures.
David McNarry (UUP)
I want to make it clear that I am not taking part in a job interview.
It is estimated that approximately 15% of the toxic assets held by Irish banks, which will come within the scope of NAMA, reside in Northern Ireland. There is no need for an all-Ireland summit, as was suggested by the proposer of the motion. However, that statistic alone is sufficient reason for the First Minister and the deputy First Minister —
Peter Weir (DUP)
We can bandy figures about, but my understanding is that the figure is a lot less than 15%. Indeed, as the proposer of the amendment indicated, it is somewhere in the region of €5 billion out of the €70 billion, which makes it 6% or 7% rather than 15%.
David McNarry (UUP)
There are various figures; one can take them one way or another, and I will stick with the 15% that I suggest for the toxic assets held by Irish banks in Northern Ireland.
The debate is all about getting information, and the best way to get it is through what I hope the Finance Minister will be doing on this matter. That 15% is sufficient reason for the First Minister, the deputy First Minister, the Finance Minister and the Minister of Enterprise, Trade and Investment to be proactively engaged with the Irish Government looking after Northern Ireland’s interests in the context of any solution that the Irish Government might find for their banking loan and asset situation. That is quite simple.
The national assets management agency will obviously have an impact on the potential disposal of significant assets located in Northern Ireland — most notably, land and building development assets. That is where we come in. That point was made in the debate on the Second Stage of the National Asset Management Agency Bill 2009 by Brian Lenihan, the Republic’s Finance Minister. He said:
“40% of these loans are cash flow producing.”
They are not totally no-hope loans. Over the 10-year time frame envisaged, he continued:
“The cash flow produced will be sufficient to cover interest payments on the NAMA bonds and operating costs.”
I am glad that our Finance Minister is here. He needs to establish how many Northern Ireland asset-backed bad loans are in that 40% cash-flow-producing category, and how many are in the 60% “no-hope loan” category. Establishing that would go a long way to determining how NAMA would handle those Northern Ireland asset-based loans. Indeed, I say to the Minister that that would be no bad thing. In fact, it would be beneficial for us to know the extent of the bad loans that are floating in Northern Ireland and held in toxic banks other than those covered by NAMA. Perhaps the Minister can tell us what he knows about that situation.
That information will be critical in formulating the approach that we should take to the Government of the Irish Republic over the disposal or management of those assets, and to banks operating here that are outside the scope of NAMA. There is a question mark over what happens outside NAMA. We do not have an inside track on that. Therefore, if NAMA were to find that a substantial proportion of Northern Ireland assets were in the cash-flow-producing category, its attitude would be very different, because that would relieve the situation substantially, and this would become an asset management issue rather than the fire sale that Mr Farry talked about.
I would welcome comment from the Finance Minister as to the precise nature of the Northern Ireland assets that NAMA is likely to take into management. Will he confirm what proportion of Northern Ireland-based assets is cash-flow producing and what is not? I presume that he has done some homework on the matter before he enters into negotiations with the Republic, because information is everything in such a situation. Even if it only talks that he enters into, rather than negotiations, it is necessary to establish that information.
We in Northern Ireland also need to establish where our property assets are likely to be over the next two years. I would welcome informed comment from the Finance Minister on that matter, because it will have a direct impact on the cash-flow potential of property assets in Northern Ireland that are about to come into the ownership of NAMA. The other side of that coin is that NAMA-owned assets here will have a direct impact on the recovery potential of our property market, both domestic and commercial.
I appeal to the Minister to look again at, or at least to confirm the possibility of, unlocking the value of Government property assets, so that we can invest to protect and create jobs. I remind the Minister, who may say that it is not all his fault, that both he and his predecessor have presided over a doubling of unemployment on their watch, and we do not need any more.
Like Stephen Farry, I welcome the debate on NAMA. We need to be better informed about it, and the debate is helping us to do that.
I am surprised that Sinn Féin has tabled a motion on the economy. Its reputation on economics is not good and has been soundly rejected at the polls in the South. Gerry Adams, the president of Sinn Féin, recently said that his party is not interested in managing the economy. It strikes me that, perhaps not for the first time, Sinn Féin has come to the point where the extreme left meets the extreme right and they share the same position.
The extreme left has moved to an anarchist position. Jennifer McCann is up for seizing property; a fairly Stalinist approach, I thought. The extreme right has a total belief in market forces and would let the banks collapse irrespective of the consequences. The message to the people is the same from either stance. The extreme right would say “let them eat cake”; the extreme left would simply say “let them not eat at all”. That is where Sinn Féin finds itself; it is not engaging in serious debate on the issue.
Martin Ferris accused the Irish Government of the robbery of €12,000 from every man, woman and child. Martin Ferris is a man who would know about robbing from the banks, but I think on this —
John O'Dowd (Sinn Féin)
On a point of order, Mr Speaker. How appropriate is it for the Member to make criminal accusations against another Member of a legislative body on this island, never mind an ordinary member of the public?
John O'Dowd (Sinn Féin)
Mr Speaker, I was of the view that you responded to points of order, not the person who is involved in the debate.
William Hay (Speaker)
Order. I have heard the Member’s point of order, and I say to all Members on all sides of the House that privilege is not absolute. Let us be very careful of what we say in this House. I know that sometimes, in the cut and thrust of debate, Members can easily get carried away. I remind Members to be of good temper when they speak in this House in any debate.
There were others who were involved in robbery, and Mr Ferris showed considerable adulation towards them quite recently.
It is clear that the people have already moved beyond the Sinn Féin position. Sinn Féin was involved, with others, in organising a protest against NAMA in Dublin a week ago, and only 1,500 people showed up. There is no national movement against NAMA any more, if there ever was.
Unfortunately, I am uncomfortable with the amendment proposed by the Alliance Party. Indeed, I was not terribly comfortable with some of Stephen Farry’s remarks, which were, in parts, indicative of a unionist, partitionist mindset. Stephen Farry should think about the fact that politicians need to state the direction in which they want to travel rather than to simply comment on the situation.
It is regrettable that the amendment proposed by the SDLP was not accepted. It recognised possible implications for the future conduct of banking, the property market and the wider economy of the region that arise from the NAMA legislation. That would have been a better stance for the Assembly to take.
Lord Morrow (DUP)
On a point of order, Mr Speaker. Is it in order for a Member to virtually read out an amendment that has been ruled out of order and that has not been accepted for inclusion on the Order Paper? What are we at?
William Hay (Speaker)
No; that is not in order. I say to the Member, and to all sides of the House, that the decision not to accept an amendment should not be challenged on the Floor of the Assembly. I wish to make that absolutely clear, and I warn the Member on that issue.
I am only saying that it would have been better for the Assembly to adopt the position that was outlined in the amendment proposed by the SDLP.
We all agree that there is a need for the banking system to be fixed and for credit to be available. The banks must be in a position to borrow in the international markets, but we know that that is not possible because of the high volume of high-risk property debts. That can be dealt with in three broad ways: recapitalisation, which could ultimately lead to nationalisation; asset guarantee schemes; and asset management schemes such as NAMA. All three methods have been used in different situations in different countries. However, NAMA was not chosen by chance. A sound evidence-based approach led to its selection, and it has been approved by the International Monetary Fund (IMF) and the European Central Bank (ECB).
Although it is certainly not risk free, the NAMA scheme contains important protections. The banks take a considerable hit at the outset. They receive €54 billion against a book value of €77 billion and are, therefore, €23 billion down straight away. The current value of those assets is €47 billion, and the Government hope to make up the €7 billion gap as the assets increase in value. We should note that €2·7 billion is in the form of subordinated bonds, and those are payable only if the Government go into profit.
The legislation also contains provision for a further levy if the Government are still making a loss, so significant protections are available. The rise in value to make a profit is quite modest: 10% over a 10-year period. If the scheme works, the banks will be able to raise capital as private finance. If not, the Government will capitalise the banks and take an equity share.
Most advice says that it is in the best interests of the Irish economy to keep the banks in the private sector and to have at least three competing banks. There is understandable anger in the community against the banks and property developers. There has been regulatory failure and dubious practice. Developers will not profit from the NAMA scheme, and I welcome its commitment to include a windfall tax on rezoned land.
The Irish Government have offered to consider that at its Committee Stage, and it is important that they consider other reasoned amendments.
Simon Hamilton (DUP)
I am not really interested in getting into a debate on the merits, or otherwise, of legislation that is before the Irish Parliament. It is up to the Members of that elected institution to debate and discuss that legislation. However, I concur with some of the comments of a Member who spoke previously. A Sinn Féin spokesman described the NAMA legislation as “the crime of the century.” It is a bit rich for anyone in the republican movement, given its history of major crimes against banks across Ireland, to describe NAMA as “the crime of the century.”
Simon Hamilton (DUP)
The Member is right, because €70-odd billion is much more than £25 million.
I do not want to get into the whys, wherefores or merits of NAMA. I accept the point that several Members made that a fire sale should be avoided, even though the €4·8 billion of assets in Northern Ireland is significantly less than the €20 billion than was mooted at one time.
There are still potential negative consequences for Northern Ireland in the deflation of an already depressed property market, and there may be an impact on the public sector in Northern Ireland as we try to realise best value for unused, unwanted assets in the public sector portfolio.
I support the line of action that the Minister has already engaged in through bilateral discussions with his counterpart in the Irish Republic. He intends to have more such talks in the future. As we move forward, any direct line of communication from any advisory panel or board to the Department of Finance and Personnel is to be welcomed in order to avoid some of the serious consequences that might result from NAMA not dealing appropriately with assets in Northern Ireland.
I wish to touch upon the more important conclusion that we in Northern Ireland can draw from the fact that the Irish Parliament has to pass that legislation, or, if not that legislation, something else, and it is the picture that it paints of the current Irish economy and the explosion of the economic argument for Irish unity. Today, that argument is as busted as the Irish banks themselves.
For years, we were told that the unionist argument against Irish unity that was based on economic reasons was disappearing and that the Irish economy was becoming the most vibrant, dynamic and innovative economy, not only in Europe, but in the world, and deserved to be called the Celtic tiger economy. That Celtic tiger has well and truly turned into a pussycat. We now have very clear evidence, as shown by the introduction of the legislation in the Irish Parliament, that that so-called strong economy was not built on solid foundations but on severely shifting sands, which have now collapsed under the Irish people.
Simon Hamilton (DUP)
Hold on.
We have heard the International Monetary Fund say that the Irish economy’s contraction will be the most severe of any advanced economy in the Western World. I will now give way to the Member.
Does the Member not admire the position of the Irish Government? Yes, they have got into difficult circumstances, but they are finding their way out of it. I have seen economists’ prognostications to the effect that, in a short time, the Irish growth rate is expected to rise again to 4%. I admire the Irish Government’s independence of action. They have a problem; they are dealing with it, and they will get out of that situation. I wish that I could say the same about our economy and the solutions that have been offered.
Simon Hamilton (DUP)
The days of 4% growth or, indeed, any percentage of growth in the Irish economy are a long way off. The heady days of near-double-digit growth in the Irish economy have long since passed, probably never to return. Again, that underscores the argument that such growth was temporary, and it is now going back to more appropriate levels.
One only has to look at all the evidence: the contraction of the economy by 13·5% between 2008 and 2010; the jobless figures have gone from being the second lowest to the second highest in Europe; the Budget deficit has grown to four times the limit allowed by the EU institutions; the Irish Republic’s credit rating was, embarrassingly, lowered by Standard and Poor’s, and that was a real slap in the face for the Irish economy; and so on and so forth to the collapse in the construction industry and the cuts worth billions of euro that the public sector faces as a result of the McCarthy report.
No matter what anyone says, Northern Ireland has been well cushioned by the UK economy. There are longer-term benefits in remaining part of the fourth largest economy in the world. This is a global problem; it is not one for independent action. It will be sorted out on a global basis.
While the Northern Ireland economy, small as it is, is represented in the room, at the table, at the G8 or G20 summits, or wherever big decisions on financial futures are being taken, who is outside with his face pressed to the window looking in? It is the Taoiseach of the Irish Republic. He has always been, and always will remain, on the outside. Whatever legislation is passed in the Irish Republic —
Paul Butler (Sinn Féin)
Go raibh maith agat, a Cheann Comhairle. Tá mé sásta labhairt ar son na tairisceana seo, ach ní dóigh liom go mbeidh mé ábalta tacú leis an leasú..
I am grateful to be allowed to speak in the debate. I should point out that some of the debate, particularly the contributions from the DUP and the SDLP, focused on attacking Sinn Féin and negative politics, and Declan O’Loan attacked members who sit in Leinster House. The DUP said that the banks should not be nationalised, but it talked about that option as though it were the product of far-left loony thinking. However, one of the banks involved in the crisis, the Anglo Irish Bank, has already been nationalised, and the Irish Government heavily subsidise the Allied Irish Bank. Those who state that Sinn Féin’s economic policy is illiterate and that the banks must not be nationalised should look at what is happening in other parts of the world: Sweden had to do exactly that to get out of the economic crisis.
NAMA has been described as one of the biggest gambles on the property market by any Government in western Europe. It has been likened to placing €60 billion of taxpayers’ money on the roulette wheel in the local casino. The problem for the North is that the toxic assets of approximately €5 billion will affect the economy here.
I welcome the recent statement by the Minister of Finance and Personnel, Sammy Wilson, that he wanted to have a formal role in how NAMA affects the North, particularly its property prices. However, it is not good enough simply to have a formal role. Sinn Féin’s motion advocates that the matter be dealt with through the institutions. I acknowledge that the Assembly is one of the North’s institutions but what about the interlocking bodies, such as the North/South Ministerial Council? It is not enough to receive assurances from Brian Lenihan and the Taoiseach that they will sort out the problem. Fianna Fáil, the banks and the developers got us into this mess, and NAMA is being set up to deal with the toxic debt here and in the South of Ireland. We must have a more formalised role because, when NAMA is established by the legislation, its role will be subject to little public scrutiny. It will deal with toxic debts relating to land and developments here in the North, and the Assembly will have little or no say in that. We must, therefore, do more than seek assurances from Brian Cowen and Brian Lenihan about NAMA’s impact on the North.
The long-term impact must also be considered. People have been talking as though establishing NAMA will deal quickly with the entire issue, but that will not be the case. The North could be lumbered with the effects on the economy here and on the island of Ireland for the next 10 to 15 years.
The amendment, which attempts to water down the Sinn Féin motion, is unnecessary and, in some ways, partitionist. We must address the issue on an all-Ireland basis because it will impact on the economies of both jurisdictions. I welcome the Minister’s statement that he wants to play a formal role. However, through the North/South Ministerial Council, of which the Minister of Finance and Personnel is a member, we must take a direct hands-on approach as to how NAMA will affect the North’s economy and ensure that we are kept up to speed. Go raibh maith agat.
I am glad that the debate is taking place today, because it highlights that, whatever our political persuasion or party, a close working relationship exists between the financial structures, North and South. I am not wildly excited about NAMA; equally, I am not wildly excited about anything to do with the banking and liquidity crises.
To me, NAMA represents the least-worst option. Nationalisation would be the worst possible option: it would weigh us down, because the banks involved have assets not just in Northern Ireland but in the US and across Europe, thus creating very difficult circumstances for a nationalised bank to unravel.
As others have said, there are serious implications for the economy of the island as a whole. There are also serious implications for downstream financial jobs and for the construction industry. I think that the proposer of the motion, Jennifer McCann, said that we need a joined-up economic approach. I agree. However, the motion deals only with banks that are based in the Irish Republic. Effectively, we have no local banks. In addition to those that are based in the Irish Republic, at least 70% of Ulster Bank’s parent company is nationalised and the Northern Bank is owned by Danske Bank.
Many aspects of regulatory failure come from a global and a local perspective. I apologise to Mr McNarry, but I will pick up on a point about which there was some debate and discussion. All my figures suggest that some 6% of the Irish banks — assets that are proposed for NAMA — which is a figure of some £5 billion, are based in Northern Ireland. The figure of 15% probably arises from the fact that considerably more of those banks’ assets are based in the UK.
To be honest, I am somewhat confused, because the motion contains serious contradictions. I will not go into the details, but it is very worrying for those of us who have an interest in jobs and the economy. The president of Sinn Féin recently said that the party was:
“not interested in managing the economy.”
If I have got that quotation wrong, it needs to be corrected.
John O'Dowd (Sinn Féin)
It is clear that the SDLP has hired a group of individuals to read through Sinn Féin’s speeches and pick out half sentences, half quotations and half remarks, and then its Members come into the Chamber like excited children and read them out. If SDLP MLAs quote the president of Sinn Féin or any other politician, they should read out the entire content of the speech from which the quotation came.
I have no difficulty with that if it is standard practice, but the problem is that Sinn Féin, from its president down, has misquoted and misunderstood everybody else for years. If that is a misquotation, I am glad for it to be corrected, because I am keen for Sinn Féin to take an interest in the economy.
I am bewildered by the thrust of the motion. It gives us the sense that Sinn Féin is out of touch and may not be up to speed on the economy, because it backed the bank guarantee system that was introduced in the Irish Republic some time ago. That scheme was the precursor to, and the necessary foundation for, NAMA. Those of us who try to observe these matters, and who read newspaper stories on what is going on, are confused, because we are shuffling from pillar to post. It is important that there be consistency, because we will get out of this financial crisis only if we are consistent and responsible.
NAMA is by no means perfect. It has many faults, and I have a degree of scepticism about much of it. However, as I said earlier, the Government’s intervention is the least-worst option. Our banking system, North and South, cannot be unravelled or separated. It is completely interconnected. Many of the banks, such as the Bank of Ireland and the Allied Irish Bank, operate on an all-island basis.
If the Irish Government were not to step in now to reduce some of the risk and increase the flow of credit to those banks, we in the North — homeowners, business owners and everybody else — would suffer severely from the lack of liquidity. Ordinary, decent hard-working people have suffered enough.
I could stand here all day condemning the stupidity and mistakes of the banks, but I will not do that. They have made major mistakes; setting up NAMA is not bailing out the banks, it is an attempt to ensure that there is liquidity.
Mr Speaker, I am preparing a dossier which I intend to take not just to the Prime Minister, but to the Irish Minister for Finance to resolve some of those issues.
The issues raised by the motion highlight the interdependence between the North and the South, whether or not people like that from their different political points of view. However, I say that in a non-partisan way, because we must be sensible about the economic and financial crisis that we are in. It is important that the North and the South co-operate to achieve a beneficial end to that crisis for all our people.
There is no value in adopting a partisan political stance, and I think that the Minister of Finance has shown the way by adopting a sensible and pragmatic approach to the problem. I believe, Mr Speaker, that the Minister is blushing with embarrassment. However, his first important step was to meet the Minister for Finance, Brian Lenihan, in Dublin.
The Minister indicated on radio this morning, as I am sure he will tell the House, that he is prepared to engage with any Committee that is set up to liaise between North and South, to monitor what is going on and, quite sensibly, to address problems in our own economy. I warmly welcome that. It is important that all of us in the House endorse that point of view. We should continue to monitor the situation closely.
One thing on which we all agree is that there cannot be any fire sale, because that would simply worsen our economic and financial crisis. That must be avoided. However, there must be a measured, managed way of dealing with the assets in Northern Ireland that NAMA will take over from the banks. Those assets are apparently in the order of €4·6 billion, which is a very substantial amount of money. For the welfare of all our people, it is important that we get this right: no fire sale. Those assets must be properly managed.
Of course, as Mr McNarry pointed out, not all the loans involved are impaired. There are assets that can produce an income, and, helpfully for all of us, generate wealth in our society. We have to get those assets working. Given a common purpose and North/South solidarity, I am reasonably confident that we can work through the economic problem: we have to, otherwise we will all go down the tubes. Therefore, it is important that all of us in the House welcome whatever efforts are made.
I understand that there are different ways to approach the situation, of which NAMA is just one. Nationalisation is one way, and asset guarantee schemes are another. However, this is the way that the Irish Government have chosen to do it, so we must work with that system. Let us get on with the job, because there is no merit in raking over the ashes. We must be optimistic about the future, work through things and create a better situation for all of us.
Sammy Wilson (DUP)
The debate has been useful in showing the concerns that exist about the issue in Northern Ireland. It has also been useful because it demonstrates some Members’ economic illiteracy, which we will have to do something to correct over the next number of months.
Taking up from where the previous Member finished, co-operation between Northern Ireland and the Irish Republic on this issue can be beneficial to both jurisdictions. Although I and my party are not happy with the political trappings of co-operation, which sometimes only occurs for political reasons, when there are good, solid reasons for the Government in Northern Ireland to work with the Government in the Republic, my party will play its part, and I, as the Minister of Finance and Personnel, will play my part individually.
Although some people, as they pointed out during the debate, recognise that the Celtic tiger, to use the term that Mr Hamilton used, has become a pussycat, it is in none of our interests for the economies of the Republic and here to be in a weak state, because an element of cross-fertilisation and cross-trade benefits both sides. The Member made an observation that, although correct, is not something that we wish to see happen.
I shall deal with a number of points made during the debate. I do not wish to get into a debate about the rights and wrongs of NAMA. The Irish Government have taken a decision about the way in which they will manage the difficulties that banks based in their jurisdiction got into as a result of sometimes lending unwisely on assets that should not have been lent on in the first place. That is a decision for the Irish Government. As far as I am concerned, the only input that I wish to have is that if they set up that system, I want to ensure that issues affecting Northern Ireland are protected through the Government-to-Government or Minister-to-Minister co-operation that we have.
I do not accept that NAMA should fall within the remit of the North/South Ministerial Council, and that is one of the reasons why I am not happy with the motion or the amendment. Indeed, that point was accepted by the Council. Given that a joint communiqué was issued, I assume that the deputy First Minister took the same view. The North/South Ministerial Council agreed that the two Finance Ministers will deal with the issue. We do not believe in widening the North/South Ministerial Council’s remit, and I believe that if and when co-operation is needed, there are other ways to achieve it.
Sinn Fein has got its economic analysis of NAMA wrong; it is not the crime of the century, and it is not privatised profit and socialised debt. If the Member who had made the comment had looked at how NAMA is to work, she would know that the burden of risk falls on the banks, not on the Government.
Jennifer McCann (Sinn Féin)
Is it not the case that the burden of risk and the financial implications of NAMA fall on the taxpayer, rather than on the banks?
Sammy Wilson (DUP)
As I said, I do not want to get into the detail of NAMA. The assets have been discounted already by 30%. If there is a profit on the eventual sale of the assets, it goes to the taxpayer, not the banks. If there is a loss, a levy is imposed. I do not know where the Member sees any risk to the taxpayer.
However, I do not want to get into a debate about the rights or wrongs of NAMA. That is a decision that the Irish Government are taking and it is one that we will work with, doing our best to safeguard Northern Ireland’s interests.
The second point that has come out of this debate is the extent of Northern Ireland’s exposure to all those debts. When he gets a black picture, Mr McNarry’s usual style is to try to paint it blacker. Even if he does not have the figures to paint it blacker, he will make an eejit of himself to produce a blacker picture. He was not happy at the figures that were given and that seemed to be available to every other Member, which stated that 6% of the debts that the banks hold are based here in Northern Ireland. He was even given the figures: €4·8 billion out of a total of €77 billion. So, if he did not believe the percentages, he could have worked it out for himself. If he does not know how to do it, it is done by putting one over the other and multiplying by 100. That is approximately one fifteenth. A common mistake made by very poor GCSE students is to think of a fraction as a percentage; perhaps that is where Mr McNarry got 15%. However, one fifteenth is 6%; it is reached by multiplying one fifteenth by 100.
Mr McNarry wanted to paint the picture blacker. He claims that it is 15%, but it is not; it is 6%. However, as Mr Farry has pointed out, that is still a significant figure for the Northern Ireland economy.
Mr McNarry then asked me whether I had done my homework and found out the nature of those debts, including how many of them could produce a cash flow and would, at the end of the day, be worth something. They are all assets, so they are always worth something. The mistake would be to try to get rid of them quickly because, in current circumstances, they will be worth less. The whole idea of having 15-year bonds is to allow for their release over a period of time, so that the assets could be sold when the best value could be obtained.
Mr McNarry shows his ignorance, not this time with figures, but with his understanding of the nature of assets. An asset is bound to have intrinsic value. Its intrinsic value will change over time. The Irish Government are trying to allow as long a period as possible during which those assets can be turned back into cash to safeguard against the diminution of their value in the way that some have suggested. I noticed that Mr Butler wanted them sold quickly. That would be an absolute disaster, given the current state of the market.
I asked about the division of the assets, but the Irish Government are not in a position to answer at present. However, we know that about 40% of them are in the form of development land and the rest are in the form of commercial loans or in property. I assume that commercial loans and property will produce some return.
The third question that was asked was: how can we avoid a fire sale? A number of Members asked that question. It was one of the concerns that we had when we went to see the Irish Minister. I put it to him bluntly that there was a cynical view in Northern Ireland that because the political implications of selling assets and their value falling would be less in Northern Ireland than in the Republic, the fear was that, if money had to be realised quickly, Northern Ireland would be the place where the assets would be sold. He talked straight to me and I talked straight to him on the issue. The point that he made — sensibly, if one thinks of it — was why would the Irish Government wish to sell off assets quickly, make a loss on them and not realise their full value.
Do not forget that — Mr O’Loan gave the figures very accurately — the rate of discount is 30%. The Irish Government have paid €54 billion for assets that are currently valued at €47 billion. An uplift of 10% over 10 years would still leave them about 45% below the 2006 peak level and with a fairly low value attached to them. Why would the Irish Government sell those assets off quickly because, once they get to the break-even point, the profit goes to the taxpayer? There is no incentive for them to sell the assets off quickly. The mechanism —
John O'Dowd (Sinn Féin)
The Minister may be aware of the recent case in which the ACC brought a major Irish business developer, Liam Carroll, to court. When challenged about the value of his property, he admitted that it was worth not 70% but 25% of what was expected originally. If that is spread across the economy, the Irish Government may have no choice but to sell off even failed assets to recoup some money. They will not recoup all their money, but they may have to recoup some of it.
Sammy Wilson (DUP)
The 30% discount rate that has been given is, of course, an average figure. The Irish Government have been quite upfront about the fact that it is an average figure, which means that some assets will have a discount of less than 30% and some more than 30%. The whole point of buying time by having 15-year bonds is to deal with the particular problem that the Member has raised. There will not be a tendency to go for a fire sale.
However, the third point that has been made is that we have assurances, but what guarantee do we have and what input do we in Northern Ireland have to the operation of NAMA? My preference would have been — again, I will be blunt — to have had someone on the board of NAMA. That was not possible. The Irish Minister and I then looked at what other mechanism might be available. He suggested that there could be direct input through the advisory committee.
David McNarry (UUP)
I am sure that the Minister will indulge someone who he has referred to as an eejit and ignorant. If that is the way that he wants to contribute to debates in the Chamber, so be it; there will be another day.
The Minister talks about his preference to have someone on the board of NAMA, and presumably that is to gain information. Can he illustrate to the House whether such information is being sought from those banks outside NAMA in Northern Ireland that have toxic debts? What is he doing to secure that information? Is he looking to put someone onto the boards of the banks, the Treasury and any outfits that there are that are concerned about what we do not know? The Minister may, of course, know more than us, which is why we are having this debate.
Sammy Wilson (DUP)
When I spoke about the Member’s figures and his ability to manipulate or work them —
Sammy Wilson (DUP)
Mr Speaker, I will decide how I respond to the points that the Member has made.
I indicated not that I thought that the Member was an idiot, but that, when he sought ways of painting as black a picture as possible, he was prepared to make himself an idiot by ignoring what the figures said. The Member knows full well that the Assembly, and I as Finance Minister, do not have the ability to put anyone on the board of a privately owned bank in Northern Ireland: he knows that.
Sammy Wilson (DUP)
The information about the assets, which NAMA will take over, will be known to the Irish Government once all those assets have been taken into NAMA, and I will seek the detail of that information.
Sammy Wilson (DUP)
I thank Members for taking part in the debate. I hope that we have given an indication, at least, that we are trying to deal with the issue in a constructive manner. I will continue to work with the Minister for Finance in the Republic to make sure that Northern Ireland is not placed at a disadvantage.
William Hay (Speaker)
I call Sean Neeson to make a winding-up speech on the amendment. He has five minutes in which to do so.
Sean Neeson (Alliance)
I welcome the debate, and it has shown that the issue is controversial. NAMA has caused deep divisions in the Republic of Ireland, even among academics. However, this debate is not about the pros and cons of NAMA. Although it will impact on Northern Ireland, the issue is one for the Government in the Republic of Ireland. However, our Ministers have an important role to play in safeguarding the interests of the people in Northern Ireland who will be affected by NAMA.
(Mr speaker is in charge of proceedings of the House of Commons in..." class="glossary">Deputy Speaker [Mr Molloy] in the Chair)
I know that the Minister of Finance and Personnel has met Brian Lenihan and has reported back to the Assembly, and I know that junior Minister Gerry Kelly has met representatives from the Republic’s Government. If the legislation goes through, assets in the region of €5 billion in Northern Ireland will be affected, as other Members have said. It is worth remembering that there was considerable investment in Northern Ireland by Republic of Ireland developers when the boom in the Republic was forging ahead.
I was struck by a recent article by John Simpson in the ‘Belfast Telegraph’, and I agree with the comments that he made. He said:
“There are two governments, north and south; two monetary systems; two inter-dependent economies, there are more than two monetary authorities to supervise the banking system. Financial and business issues do not segregate.”
He went on to say:
“setting up NAMA contrasts sharply with the methods developed by the UK Government to support the clearing banks. NAMA will take responsibility for non-performing bank loans. It will ‘buy’ the loans not at knock down prices, reflecting the present state of the property market, but at fair values.”
We must address what is meant by “fair values”, and I know that that is being considered in the Republic of Ireland.
It is also hoped, not least by me, that NAMA will encourage banks to resume lending. Members, including Jennifer McCann, who spoke in the debate, said that banks must be prepared to help small businesses. The Committee for Enterprise, Trade and Investment dealt with the issue, and I welcome that.
Stephen Farry said that the focus of the debate is on the real interests of Northern Ireland, and he went on to say that, fiscally, we are dependent on the UK Exchequer. He also said that a fire sale would be damaging to our economy.
The Member said that we are not debating the principle of NAMA. However, if the amendment were agreed, the first part of the motion would read:
“That this Assembly expresses deep concern at the possible negative economic consequences for Northern Ireland arising from the potential National Asset Management Agency legislation currently under consideration in the Oireachtas”.
Does the Member not agree that, if the amendment were carried and became the view of the Assembly, when TDs debate the NAMA legislation in the Dáil, they would think that the Northern Ireland Assembly was, in principle, opposed to that legislation?
Sean Neeson (Alliance)
I made it clear at the outset that the important issue is how we deal with NAMA itself, and the fact that that proposed legislation is being debated in the Dáil demonstrates that it has not yet been enacted. However, it is important that the Assembly and the Executive are prepared to address the interests of the people in Northern Ireland; essentially, that is what the debate is about.
I am disappointed that Declan O’Loan ruled out support for the amendment. The Alliance Party is trying to convey the fact that NAMA will have an impact on the people of Northern Ireland and on the Assembly. Therefore, I am disappointed that the Member will not support the amendment.
Paul Butler said that NAMA represents one of the biggest gambles taken by any Government. However, we must accept that we are in the midst of one of the worst financial situations for many years, and it is important that the Government in the Republic of Ireland make some plans to deal with that problem.
John O'Dowd (Sinn Féin)
Go raibh maith agat, a LeasCheann Comhairle. Reflecting on the importance of today’s debate, I think that it is clear that it is not divorced from conversations in the media and elsewhere last week on how the Executive will ensure that their Budget will deliver for the people on this part of the island. At heart, this is an economic debate, and, although last week’s debate centred on how to divide up the block grant, it should instead have concentrated on how to stimulate our economy to ensure that we have the resources to deliver for the people on this part of the island. In Sinn Féin’s view, that cannot be done separately from our neighbours in the Twenty-six Counties, and an all-Ireland approach to the economy is the only way forward.
I listened carefully to the Minister of Finance and Personnel’s comments on Mr Hamilton’s remark about the economic downturn across the border. I will paraphrase him: we should not look across the border and say, “Ah well, up yours, your economy is in bad shape.” If the South’s economy is in bad shape, the North’s economy is also in bad shape. We cannot ignore that fact, and we must examine the issue with respect to all-Ireland economic growth.
DUP contributions to the debate, although predictable, were disappointing, even from its own electorate’s perspective —
Ken Robinson (UUP)
On a point of order, Mr speaker is in charge of proceedings of the House of Commons in..." class="glossary">Deputy Speaker. I am not sure whether the acoustics in the Chamber are better than I thought they were, but will the Member clarify whether he used parliamentary language in his description of the state of the adjoining economy?
John O'Dowd (Sinn Féin)
I look forward to the Speaker’s ruling.
In relation to DUP comments on the NAMA proposals, people cannot close their eyes and ears and hope that NAMA will go away, and people cannot adopt a unionist mindset. Even from a unionist perspective, the implications of NAMA must be understood with regard to what it will do to the economy here, with €4·8 billion to €5 billion worth of assets under the ownership of the National Asset Management Agency —
John O'Dowd (Sinn Féin)
I will in just one second.
In his closing remarks, a DUP Member said that rather than set up structures around it, we should continue as we are. I am sorry, but if €5 billion worth of assets in this part of Ireland will fall under NAMA, we must set up structures around that and manage it.
Kind words from the Fianna Fáil Finance Minister will not reassure me. I am surprised that they reassure Sammy Wilson. We are looking at a Government that will, more than likely, go from power if a Constituency choses an MP to represent it by..." class="glossary">general election is called. As a republican, reassurances from a Fianna Fáil Minister do not go too far. We must ensure that we have structures around the NAMA proposals if they are passed by the Dáil, and there is no guarantee that they will be passed.
Contrary to what our SDLP friends tell us, Sinn Féin is not the only party opposed to NAMA. The Labour Party, the SDLP’s colleagues or sister party, is opposed to it. Fine Gael, another sister party, is opposed to it. The only party that supports the legislation in the Dáil is Fianna Fáil. The Green Party is calling an all-party delegate conference to decide its final approach. I know that it is embarrassing for the SDLP, as Fianna Fáil may be the party that it is involved with after it takes on a new leader. Fianna Fáil is the party that brought the economy to its present position, lectured Sinn Féin on being economically illiterate, led us down this path and left the economy of the Twenty-six Counties in a mess.
The legislators on this island have the responsibility to ensure that we bring forward sensible legislation and find a sensible way forward to ensure that we bring ourselves out of the economic downturn. The contributions from the SDLP concentrated mainly on insulting Sinn Féin, and the reason for that was to hide their embarrassment that Fianna Fáil, its sister party, created and governed over the current mess and is now trying to ensure that the developers and the landlords, of which the SDLP has many, will continue to make money on the backs of the taxpayers across the island of Ireland, not just across the line on the map. All the people in Ireland will end up paying for NAMA for many years to come. The figures do not stack up. As I said to the Finance Minister, the Dublin Government may have assessed that they will give 70% for the loans, but they do not know how much the loans — the bad assets — are worth.
The Carroll case — the first tested case in relation to the financial viability of a major developer — has been back and forth before the Dublin courts for several weeks. When Carroll was challenged over the value of his assets, he said that they were probably worth 25% of what they were a year ago. Nevertheless, the Dublin Government are assuring our Finance Minister that they will pay 70% of what they were worth. If one looks at the Carroll case, the Dublin Government will be paying 50% more than the assets are worth.
Sammy Wilson (DUP)
The figures are not based on assurances; they are based on the discount that the Irish Government are giving the banks for those loans. Do not put words into my mouth. I was not given an assurance; I was given the hard facts of the discounts. The Government are paying €54 billion for assets that are worth €77 billion.
John O'Dowd (Sinn Féin)
With respect, my point proves that they may not be. The Carroll case proves that the Dublin Government do not know how much those assets are worth. They are paying €54 billion of taxpayers’ money for assets that they do not know the value of.
That brings me to the point of the fire sale. World politics may dictate that the economy will get worse, with growing tensions between the Western World and Iran and the continued instability of the Middle East. All those factors lead into the economy. If those matters get worse and property prices fall again, where does that leave us? We will be left with even worse assets than we had in the first place, and that will force not only the Dublin Government, but the European Central Bank, to start recouping some of their moneys. Will they take a loss? They may well have to. They will be in such a dire situation with regard to their cash flow and credit that they may have to start a fire sale. What have we got to ensure that a fire sale does not start here? We have assurances from a Fianna Fáil Finance Minister to our Finance Minister.
Sinn Féin is saying that we should forget about the assurances and ensure that the matter is dealt with through the North/South Ministerial Council and that, as our Finance Minister has proposed, if the NAMA Bill does pass through the Dáil and becomes legislation, we have places by right on the board, not by request. We were informed today that when the request was made that we have places on NAMA, we were told that that cannot be done. Why can it not be done? If the NAMA Bill becomes legislation, why does this House not insist, through the North/South Ministerial Council, that we have places on NAMA and that our views are represented there?
Does the Member not realise that when he suggests that the Irish Government have simply snatched a figure out of thin air to offer to the banks for the loans, he is simply wrong? It has to be approved by the IMF and the European Central Bank and is subject to EU state-aid rules. The concept of the long-term economic value is the price that has to be paid under the rules, and the best estimates of that that can be made have been made. That is why the figure of €54 billion against the book value of €77 billion has been created.
John O'Dowd (Sinn Féin)
The Member refers to several organisations that we should be reassured by. They are the wonderful people — the European Central Bank and the IMF, which have reigned over the collapse of the world economy — who have declared that the figures are correct. Those are hardly organisations to be reassured by. Even if those figures were based on reality, new information has come to light. One of the biggest developers in the Twenty-six Counties — indeed, he has developments across the world — stood in front of a court to say that his assets are worth only 25% of what they were worth last year. That is evidence. Surely there is an onus on the Fianna Fáil-led Government to reassess their current valuations of NAMA. The SDLP’s blind support of Fianna Fáil is a disservice, not only to people here but in the Twenty-six Counties. That party needs to stand up to Fianna Fáil and say that it has got it wrong and that it is time to reassess.
Sammy Wilson (DUP)
The Member has just written off the valuation carried out by the Irish Government, the IMF and the European Central Bank, but believes somehow that if the matter were to go to the North/South Ministerial Council, we would get all the assurance we need. That stretches his credibility a bit.
John O'Dowd (Sinn Féin)
The Minister has challenged every environmentalist and expert on planet earth in his day, so it is not uncommon for politicians here to —
John O'Dowd (Sinn Féin)
We have people backing us on this issue. Regardless of the valuations, the North/South Ministerial Council must be involved in the process.
Francie Molloy (Sinn Féin)
Order. As I have some sense that there may be a Division on the issue, I will not put the Question now but will do so after Question Time. I, therefore, suggest that Members take their ease until Question Time begins at 2.30 pm.
The debate stood suspended.