Mr. Des Carville:

I thank members for their questions which showed some clear commonalities. Deputy Ó Broin asked a nicely phrased question as to whether it was a good idea for credit unions to invest in approved housing bodies. I will spend a couple of minutes addressing this issue. If I may, I will take this back up to 60,000 ft. because the role of the Department of Finance in this is to consider the issue from the credit union perspective as a different Department and line Minister are directly responsible for housing.

The credit union sector faces many challenges. The low or negative interest rate environment puts significant pressure on the incomes of individual credit unions and the credit union sector in aggregate. What this means is that the income of individual credit unions falls and they are constrained in terms of what they can invest in. As members will be aware, on 11 May the Central Bank of Ireland published a consultation paper, CP108. The issue is, therefore, being actively considered.

Credit unions also face other challenges in terms of pretty muted loan demand by its members. Thee membership also has an ageing demographic profile rather than a younger profile. There are, therefore, plenty of challenges facing the sector and it is aware of them. Based on the interaction the Department has had with the representative bodies and individual credit unions, the sector is up to meeting these challenges.

If we consider one of these topics, namely, investment income, which is very important to the viability of the sector, if structured correctly and if the economics make sense, investment in approved housing bodies is definitely a good idea. The sector has €16 billion in aggregate in assets and slightly more than €4 billion in aggregate in loans. The loan to asset ratio is not viable in the medium to long term. For this reason, credit unions must generate income some other way. I certainly see approved housing bodies being part of a solution, although they will not be the entire solution because, as the credit union sector would acknowledge, it would not make sense to put all of its surplus cash into one investment class.

The various papers produced by the credit unions, which are very good, detailed and well thought out, refer to a potential investment of between 10% and 20% of their assets in social housing. This is from where the figure of €2 billion referred to yesterday comes. This figure is at the upper end of the spectrum because it assumes that every single credit union will invest the maximum amount. For this reason, I would be cautious about that number. Nevertheless, it is still a sizeable amount which could make a material difference from the sector's point of view.

As to whether the Department believes investing is approved housing bodies is a good idea, from the credit union viability perspective, we believe absolutely that it is a good idea and we are very keen to work with the representative bodies and other stakeholders, including the Central Bank, to try to progress it in a constructive manner.

Another issue that arose yesterday ties in partly with the timing and frustration about what has been happening in the past couple of years and I will ask my colleague, Mr. Corr, to discuss that matter in a moment. There is an issue with the vehicle used to execute the idea of investing in approved housing bodies. While we all agree that the idea makes a great deal of sense from everyone's perspective given the need for social housing and the needs on the credit unions' side, the question is how we bring these needs together and execute the idea. As members will be aware - I hope they will also empathise in this regard - we have constraints around state aid rules, the directorate general for competition and having a vehicle on balance sheet when we are trying to reduce, as a matter of policy, the debt to GDP ratio in a downward rather than upward trajectory. That is only one potential avenue in terms of establishing a vehicle, however. The credit union sector itself could establish a vehicle, as could the private sector. We saw also in May that the Irish Council for Social Housing has funding to explore the establishment of such a vehicle. There are, therefore, several opportunities or ways to skin the cat. We would like is to have a parallel process on the vehicle at the same time as the Central Bank's consultation on the investment regulations in order that the regulations will, we hope, be changed by the autumn or as soon as possible. That is, however, a matter for the Central Banker as the regulator which is independent of the Department. We can also work with the industry to try to figure out whether there is a mechanism to create a vehicle which we can use to execute the idea.

Mr. Corr will comment on the frustrations that have arisen regarding the time it is taking to make progress in this matter. A considerable amount of work has been taking place behind the scenes in the past couple of years.