The Minister for Finance this morning said he was not contemplating failure in the operation of the National Asset Management Agency (Nama) following the passing of legislation to create it.
Last night, Brian Lenihan said the banks should start transferring their largest development loans to Nama in a matter of weeks. The Bill setting up the agency yesterday passed all stages in the Dáil and Seanad.
Mr Lenihan said he envisaged that the board of Nama would be appointed by the end of this month and a chief executive put in place.
The Bill passed its final stage in the Dáil yesterday by 81 votes to 62. There were 37 amendments down for debate the last day, although only 11 had been discussed when the vote was called. One of the amendments included in the Bill which provides protection for whistleblowers in the banks and Nama was initially proposed by Fine Gael.
In the aftermath, bank shares were mixed on the Irish market this morning. AIB lost slightly, falling 0.15 per cent to €1.91, while Bank of Ireland gained just over 0.5 per cent, rising to €1.87. Irish Life and Permanent, which is not involved in Nama, was trading 3.5 per cent up at €4.90 just before 10am.
Speaking on RTÉ this morning, Mr Lenihan said he was satisfied that the measures taken would ensure the return of credit to help businesses. Mr Lenihan said the banks would decide by Christmas whether they were to come under Nama.
After its passage through the Dáil, the Nama Bill then returned briefly to the Seanad for approval of the Fine Gael amendment. It will now go to President Mary McAleese for signature.
Also speaking on Morning Irelandtoday, Labour finance spokeswoman Joan Burton said the way in which Nama was managed would be of "critical importance" and said her party would use legislation if necessary to ease its burden on taxpayers.
"Any party that goes into government inherits a body of legislation from the previous government and has to work within that. Would we seek to change it? Would we seek to reduce the burden on the taxpayer as quickly as possible? Absolutely."
She noted, however, it did not appear as if there would be an election in the near future.
Ms Burton said it was ironic that as the Nama Bill was being passed, its original author, economic consultant Peter Bacon, had released a "devastating" report on the State's hotels. Mr Bacon's report found a quarter of the hotel rooms in Ireland need to be closed down urgently because the sector in its entirety is insolvent.
Discussing the upcoming budget, the Labour frontbencher said it was an "inconvenient truth" for the Minister for Finance that what he set out in his April emergency budget had fallen "very far short of what he plans to do in reality".
Ms Burton said she accepted Mr Lenihan's figure of €4 billion in required savings but added the Minister needed to publish in full the study he commissioned on higher-level salaries in the public sector.
"Our view . . . is that if he is asking for sacrifices from people in the public sector, he really has to start from the top with the higher paid." Ms Burton said reductions should come in the pay for those earning more than €200,000.
"There is scope, in my view, for contributions of upward of a billion . . . for instance, from the phasing out of tax reliefs which in particular benefit better-off people." She denied the Minister for Finance's claims that these reliefs were being phased out gradually.
Mr Lenihan said the choices for the budget "very limited and very restricted" given the structure of the State's expenditure and borrowings.
"We need in the first instance to stabilise our borrowing, and that's why €4 billion is needed here and now in this budget," he said today.
The Minister repeated that some means of taxation or means testing was necessary for child benefit. "
"We have to recognise that we have in this country for the first time since 1931 seen deflation take place. Month on month to October this year, we had a 6.6 per cent decline in the cost of living, that's very dramatic."
Citing ESRI research on how deflation has affected different societal groups, Mr Lenihan said retired people had seen their cost of living fall "only" 3 per cent. "If you look at the other groups it is 7 or 8 per cent for the unemployed, for the higher-income earners, and for lower-income earners, it's 5 per cent," the Minister said.
Responding to Ms Burton's call for the abolition of tax reliefs, Mr Lenihan said many of the reliefs were very important and denied there was a "pot of gold" in terms of those reliefs.
Eilis Quinlan, chairman of the Irish Small and Medium Enterprises Association (Isme) today said she had no confidence in Nama's ability to free up lending for businesses.
She also called for social partnership to be ditched and for a National Representation Forum, to include representatives of small business, to be created. She said small business concerns were being ignored in the decision-making process.