LOOK up ‘urgent’ in any standard dictionary and it will offer definitions such as ‘compelling’ or ‘requiring immediate action or attention’. Peruse the concise Noonan-Kenny lexicon and you find such turgid phrases as ‘interdepartmental groups’ and ‘no definite timeline’. Their dictionary is small. In it, ‘cleanliness’ is actually next to ‘godliness’.
The Government’s massive majority came on the back of a promise to tackle the twin problems of unemployment and mortgage arrears. Every poll during the year leading up to the election told Kenny and his handlers that he was going to head up the next government, so, surely, he had people behind the scenes working on drafting plans to tackle the problems.
The Programme for Government may devote a page and a half to distressed mortgages and housing, but it is woefully short on specifics. The few there are, such as expanding Mabs to become a debt-management agency with quasi-judicial powers, have hardly been mentioned lately. This may explain why, as the Coalition enters its seventh month in power, ministers are still talking of things they may or may not do in the future.
When it comes to the here and now, the one thing they have actually done is to renege on commitments given in February. The Fine Gael promise to direct banks in receipt of State aid not to pass on interest rate increases has been shamelessly abandoned.
Worse still, the party has abandoned it on the spurious grounds that it found the situation in the banks was worse than it had thought. This is hard to swallow as, last December, Fine Gael and Labour were telling us that everything — the Government, the economy, the banks — were completely banjaxed.
Are they saying now that while they claimed in public that everything was much worse than it appeared, in private their backroom experts were drafting policy proposals based on the most optimistic forecasts?
Despite the Government’s view that the problem is not getting rapidly worse, the reality for people in their homes is that it is. As Flac has pointed out, one in 10 mortgages was in trouble at the end of 2010. By March 2011, it was up to one in nine. Now we see almost one in every eight mortgage holders struggling.
The first step this Government needed to take to tackle this crisis was not to allow the decision-making and initiatives around debt resolution to rest with the banks.
Yet it seems they are about to do the opposite. The banks have shown themselves singularly incapable of supporting and assisting their viable business customers — what makes the minister or the Department of Finance think they will deal any better with distressed mortgages?
The one area where everyone — Government, opposition, Central Bank governor and regulator — is in agreement is that there is no single magic bullet. There is no ‘one-size-fits-all’ solution to address everyone’s problems. What is needed is a suite of measures and supports to ease the pressures on people in difficulties.
These include allowing people to extend their mortgages over longer periods, giving some people the option to rent back their house from the bank, and debt offset schemes. It could also include my suggestion, published in the Sunday Independent in May 2010, about dividing the debt between the bricks and mortar structure and the plot of land on which it stands. This would allow the mortgage to be reasonably discharged on the house within an acceptable period, but mean that the householder continues to pay a lease on the land for a much greater period.
We also need to look at revising our longer-term approach to financing home purchases. This includes examining the system employed in Denmark.
Mr Noonan assures us all that the Government is almost ready to act and that we won’t have to wait for his December Budget to find out what he is planning.
While even October is too long a wait, I am prepared to take Noonan at his word — though the evidence, particularly his damp-squib Jobs Budget, suggests it won’t be worth the wait.