PERSONAL INSOLVENCY BILL 2012- SECOND STAGE

I congratulate the Minister, Deputy Shatter, on his pioneering, comprehensive and realistic legislation. He has a major record as a legislator and this Bill adds to it. In congratulating him, I also congratulate the Government on this important legislation.
Listening to Deputy Boyd Barrett brings one into a fantasy world and makes one think that life is so easy, that money grows on trees and that there are simple solutions. On Committee Stage, I would like Deputy Boyd Barrett to tell us where he sees the additional taxation to accrue the moneys necessary to provide debt forgiveness. Where will he source the money, who will pay it and how will he administer the taxes? Does he foresee this money as additional to the €10 billion of tax he cited as desirable in next year’s budget during the referendum campaign? If it is not additional, where will the €10 billion of additional taxes be placed, on whom and by what process?
The major advantage of the legislation is not so much its specific provisions, although I will attempt to deal with them in the time available to me, but the fact that it will create conditions where creditors and debtors will be facilitated to enter into realistic discussions. The incentive for creditors is that they will have a resolution option which avoids bankruptcy on the part of the debtor, for the new shortened period of three years, out of which they are unlikely to gain anything. The advantage to debtors is that they will have access to a process whereby agreement can be reached on their using a realistic portion of their income to discharge their debts while retaining sufficient to sustain a reasonable standard of living. Deputy Boyd Barrett is correct in pointing out that the banks were rescued by taxpayers and remain heavily subsidised by them. As such, there is an onus on the banks to forge imaginative solutions that will accommodate the large numbers of people in difficulty. They must bring forward a range of products that will allow customers to reorganise their finances and recover their financial standing. In fact, the financial institutions have several obligations. They must work to restore their own well-being, as well as fulfilling their moral responsibility to their debtors and to the taxpayers who are subsidising them. To do so, they must bring forward products that are realistic, accessible and useful. The importance of this legislation is in its efforts to facilitate them in so doing.
The Bill sets out three types of debt restructuring agreements that will be available to people according to their needs. The purpose of the debt relief notice arrangement is well charted in the Bill and will be realistically targeted. We have had some nonsense talk in this Chamber to the effect that it should be made available to any person with debts above a certain threshold. While consideration should be given to restructuring debts, where people have sufficient income to meet their financial obligations, they should and will remain obliged to do so. These provisions should only be available to those who genuinely cannot pay. The debt settlement arrangement for unsecured debt and the insolvency arrangement offer a degree of flexibility over time to persons struggling with serious debt. I urge the Minister to include financial advisers as well as accountants and solicitors in these provisions. Once their bona fides are established, people with expertise and a track record in dealing with such matters should be deemed fit to act as intermediaries in the process.
The success of this Bill will not be so much in its implementation as in the fact that it will create the conditions where all parties will take a more sensible and realistic approach in dealing with unsustainable debt. Anything which reduces the likelihood of such matters ending up in the courts will surely be welcomed by all. I reiterate my plea to the financial institutions to respond to the legislation with imaginative products. Taking a realistic approach whereby people are required to pay a reasonable and sustainable portion of their income is in the creditor’s interest. If the banks engage in the process in a reasonable way, it will have knock-on benefits for the whole economy. Such an approach makes sense in macroeconomic terms, in terms of restoring individuals’ personal circumstances and in terms of restoring banks to profitability. The speedier the process and the more realistic the terms of individual agreements, the more likely it is that they will work. There is no advantage to creditors or debtors in having unsustainable arrangements that are likely to collapse after a few months.
There is no avoiding the inevitability that some people will seek immorally to deny and renege on their debts. No quarter must be given such people, who make up a very small minority of all those in difficulty. The vast bulk of people are earnestly seeking to address their situation.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website