Nama requires strong oversight because the potential exposure for taxpayers is so large, writes NOEL WHELAN
PUBLIC DEBATE in this country has had only two weeks to absorb the content of the McCarthy report into public sector spending and numbers. However, already the publication of that document has had a transformational effect on how public expenditure is being discussed in both the political system and the media.
In the earlier part of this week, apparent leaks from the recommendations of the Commission on Taxation gave rise to an initial debate about the merits or otherwise of a property tax and of carbon taxes. When the full report from the Commission on Taxation is published in early September it too has the potential to transform how tax policy is discussed in this country.
Now that the draft Nama (National Asset Management Agency) legislation has been published we could also be about to witness an improved debate about the banking crisis. There has been much understandable anger vented at bankers, at developers, at regulators and indeed at the Government. Now, however, the focus is shifting to solutions.
For the last four months there has been much discussion about the choice between the Nama proposal and some kind of temporary nationalisation of the banks. The initial reactions of the two main Opposition parties on Thursday suggested that now that the Government has made a decision to establish Nama and has published the legislation, this is no longer a debate between alternative proposals. While they still reserve the right to engage in the blame game over what got us into this mess, their focus has shifted instead to improving the Nama mechanisms.
It is worth reiterating that nobody supporting Nama is doing so with any enthusiasm or out of any ideological commitment. It is being done out of necessity. It represents by far the biggest ever intervention by the State in the economy. No sane politician would embark on this project were it not for the absence of any workable alternative.
Nama is not an easy concept to comprehend and one can imagine this was not an easy piece of legislation to write. Apparently a steering group involving personnel from the Department of Finance, the Attorney General’s office and those in the National Treasury Management Agency already involved in preparing for the establishment of Nama, have been working on the legislation since the Minister’s budget announcement last April.
There has been and will continue to be an inevitable tension between trying to get Nama established on a statutory basis quickly while at the same time ensuring that it is grounded on a sound legal footing. Now that the draft legislation is in the political and public domain, time and space can and should be made available to reflect and deliberate upon it.
There is a need to raise levels of understanding about the Nama concept and the legal mechanisms involved. There is also a need to allow a degree of political consensus to emerge, if not about the Nama concept as such, then at least about the oversight and accountability mechanism which needs to be put in place. In addition, constructive engagement with relevant expertise within the political system and beyond can only serve to further enhance the legislation.
Last month the Government announced that the Dáil would be recalled in the middle of September to debate the Nama legislation. Publishing the full text of the draft Bill six weeks before that Dáil debate is a wise move. The Minister for Finance appears to have gone even further this week by suggesting that, once the second stage Dáil debate has been held in mid-September, the Bill should be referred to a Dáil committee.
This might allow three weeks or so for a line-by-line examination of the Bill.
One suggestion gaining currency this weekend was that the relevant Dáil committee could actually take evidence on the draft Bill at special sessions in late August or early September. This would allow the Minister for Finance, the relevant officials, the various politicians, interested parties and experts to tease out the detail of the scheme before the final text of the Bill is actually laid before the Dáil.
The decisions to be made around Nama – and particularly about the valuation mechanism for the assets to be bought from the banks – are perhaps the most politically sensitive decisions to be made in this country in years. Because the Nama proposal is unprecedented, because it will operate for a long time and because the potential exposure for the taxpayer is so large, there needs to be strong oversight in order to protect the public interest. Creative thinking is required from the political parties about how this oversight might be put in place.
The legislation as currently drafted provides that in addition to the usual accountability to the Comptroller and Auditor General and the Public Accounts Committee, the chairman and chief executive of Nama can be required to account frequently to a committee specifically established by the Oireachtas to oversee Nama.
It should be possible, however, for the political parties to agree an even more direct mechanism for political oversight of Nama and to incorporate it into this Bill.
Such a mechanism could be put in place on a cross-party basis provided it avoided the difficulties caused by the confrontational nature of our politics. This is a radical and unprecedented piece of legislation. The Dáil and Seanad should engage with it in radical and unprecedented ways.