Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I thank all the witnesses for their timely and informative contributions. Some of them have midland accents so I feel at home in this committee for the first time in a while. It is great to see. I am absolutely clear, notwithstanding comments coming from some credit union quarters, that a public banking model is not in opposition to or undermining of the credit union movement. I applaud credit unions and work for and support them. I have sent many customers their way both to invest and, more particularly, to borrow. I thank the credit unions for treating people as people and for extending leniency on time periods, sometimes to enable distressed people to remain in their homes. The compassion they have shown has manifested itself with very little in terms of bad debts. That is most impressive considering they are dealing with many people who, like me, come from a lower socio-economic background. I am proud to come from that background.

For the short time I was in government, before I got a bit chirpy, provision was being made for bad debts of up to €1 billion in the credit unions. I remember that very well. I think the actual figure across the sector was less than €100 million and there were a couple of large credit unions involved, as well as various matters other than bad debts. There was no collapse of the credit union movement. There are approximately 500 branches across the country that are doing well. Some have amalgamated. In Mr. Farrell's area of Kinnegad the credit union is being operated from Mullingar, which is grand. There is no problem as long as there is one. That €100 million contrasts with the €32 billion that was put on people's backs to save the pillar banks. I want to see something in opposition to the banks, not the credit unions, because they are still getting away with nobody being made accountable for anything. Even today, I will present a case to AIB. It irritates and angers me as I come towards the end of my political life to see all this happen. That is why I want to make sure there is something left behind.

We adopted the public banking model as Labour Party policy at our recent conference. I do not see any problem with the model Mr. Johnson was speaking about. There is no need to be defensive, if I perceive any defensiveness there. We went to Mullingar and spoke to Sparkassen representatives. The Sparkassen model would have to be modified and adapted for Ireland, that is clear. We are Paddies and we have our way of going on. As the former Taoiseach said, the Paddies and the Bridies want to know what is going on. We do it our own way. I know that. All we want is some mentoring on how things work. The Sparkassen saved Germany, let us not forget that.

We are still coming out of the recession. A lot of people might be going around with big cravats and smoking cigars again but a terrible number of people are just making enough to have a dinner today and pay the mortgage and car loan. Many of these car loans are from the credit unions, thankfully. Without the credit union, I would not have a car. The big problem I have with the credit unions, though, is the 8% rate charged for personal loans. I tore lumps off the banks here so I had better be consistent and have a small side swipe at the credit unions about that. I only got a loan the other day and I got it very efficiently and effectively with Tom Allen and the boys in Mullingar. Maybe it is all right for me but I would ask the credit unions to look at that 8% interest rate. I think I am right, although I may be wrong. Everyone belonging to me is in the credit union so we are a mixed bag in that regard. I do not think there is any need for that interest rate.

Mario Draghi appeared before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach recently. In response to questions concerning the high interest rates charged by banks in Ireland, he said these rates were the result of the quasi-monopoly - his words - enjoyed by the banks due to a lack of competition in the market. That is why we need this. It is not to take on the credit unions but to work with them. The credit union could be a model but some adaption would be needed.

I am an agriculture spokesperson and know a bit about agriculture coming from that background, as would Mr. Farrell. A €50,000 unsecured loan would be great. Any farmer in Kinnegad or out by Clonfad or Dalystown would be delighted to get that amount. However, it may not be enough.

One would only be able to buy the wheels of a forestry harvester for €50,000. When I became involved in agriculture 40 years ago in 1979, it was a different job. I do not support the use of those monstrous machines but that is neither here nor there. The €50,000 loan is a start. The mortgage available is approximately €100,000. Even in a small village such as Ballinacarrigy with only 300 residents, one would not get a house for that price. Mr. Farrell knows that village nearly as well as I do. A great start has been made and I applaud the witnesses for that. One must also consider savers. It is a typically Irish attitude to want loans at low rates and to complain when the interest on savings is only 1% or 1.5%. I agree that there must be a balance. We have to cop on and tell people they cannot have their loaf and eat it. I am in favour of a balanced contribution.

The level of regulation by the Central Bank is unacceptable. It did not regulate sufficiently when things went wild but - typical Ireland - it now regulates everything out of existence with far too much bureaucracy. The dead hand of bureaucracy is making sure credit unions cannot offer debit cards, current accounts and so on. Representatives of the credit unions were before the committee on that issue long ago. They want a widening of the services they can offer but are being deterred and restricted. We should call a spade a spade. As I stated in public, the Department of Finance is at least partly responsible. It holds shares in the pillar banks and will allow nothing to delay the return on its investment. That is what this is about. If the credit unions widen their offering of services, the 3 million bank customers might go to a credit union rather than a private public bank and the Department would lose out. I know this because I first proposed the reduction in bankruptcy terms contained in the Bankruptcy (Amendment) Act. Mother of God, trying to get it through the House was difficult. The Department was worried that the pillar banks would have to write off money. It did not mind that people were slipping across to Wales or up beyond Ballyconnell where one could exit bankruptcy after a year. As Ivan Yates said, as long as such people sat drinking coffee for the year they could return without issue. This is a joke. The dead hand of bureaucracy is holding back the credit unions and an exploration of the wider public banking model. Irish Rural Link, credit unions, managers such as Mr. Farrell and other organisations and parties should meet in the stakeholder forum to outline what does not work here. Of course, the public banking model might not work but it could be modelled and adapted. Credit unions are not banks, but unless they adopt some sort of banking philosophy, the pillar banks will keep the majority of the market forever and a day, which would suit the Department of Finance and the Central Bank. I am right about that because I know how difficult it was to lower the bankruptcy period to one year. I had black hair when I started and grey hair by the time the Bill was passed.

I will finish on my next point in deference to the Chairman who has done a great job in bringing this important issue forward. I live in the heart of rural Ireland, as do many of my colleagues. The lack of proper broadband and the way broadband was rolled out by various companies pose a significant challenge. My parish was divided in two. I know a woman with a very good business. The broadband provision stopped next door to her business, at her brother's premises. I could not persuade the company to provide her with broadband for her equestrian business which was expanding abroad. It was a waste of time talking to the company.

On microenterprises, I remember going to a conference in Kiltimagh many years ago. They were 15 years ahead of their time. There were cottage industries and microenterprises. People could work from home and make contacts across the world. Some of those at the conference in Kiltimagh were selling to China. That is what one wants. That has nothing to do with the credit unions, Irish Rural Link, Mr. Boland, Mr. Kinahan and Ms Kinahan who advocate constantly for microenterprise. They have done a good job but I regret that they are wasting sweetness in the desert air because things are so difficult for microenterprises.

I come from and live in rural Ireland. Many of the closures in rural Ireland result from rural people passing their local shops and businesses to travel to Aldi, Lidl or Dunnes Stores or another multiple in the nearest big town. They are happy to go to the local shop at 9 p.m. when one would not get a litre of milk anywhere else. Let us call a spade a spade. I will not join any marches protesting post office closures or shop closures or anything else because to do so would be hypocritical. The same applies to the credit unions. One should shop locally as best one can. During the recession, people had to stretch every euro and I understand that. All my brothers are married with families and mortgages and so on. If people have a few more shillings now, they should spend them locally. That goes for every sector. People should not whinge to Ciaran Mullooly on RTÉ about local businesses closing if they are not prepared to spend their money there. I shop for anything I can in my village. I rarely buy diesel anywhere else. If I went to Mullingar, I would probably get it cheaper. So what? I want my local petrol station to remain open. There will not be a shop between Mullingar and Longford in five years' time. I am sure it is the same in other areas. I am not as familiar with County Clare or some other areas as I am my own but the Deputies beside me told the truth about their areas. I am not a great believer in technology and I still write letters to constituents. Forget about email. As with the credit union, people want instant responses to emails. They may send it at 10 o'clock and want a reply by 11 o'clock. Any replies I said are sent in the post. If we do not send letters, there will be no jobs for postal workers.

Personal contact is the essence of any banking relationship, but it is the antithesis of what is happening today in the pillar banks. The pillar banks are predicated on impersonal banking, talking to machines and writing to post office boxes. I tried to get a loan from a bank and ended up in Dublin talking to someone who did not know me. I have been banking with Bank of Ireland since 1978 but it did not have a clue who I was. Forty years of dealing with it and I could have pretended to be the Chairman, Deputy Carey. I could have been anybody. I was involved in a campaign for the restoration of lodgement and transaction facilities. Shopkeepers who had never seen lodgment machines were forced to use them. Many shopkeepers were unfamiliar with computerisation. The banks were making little of them. I note that Ms Francesca McDonagh has copped on and is investing in bank services that allow customers to talk to staff.

On regulation, red tape and bureaucracy, people have it in their power to keep shops open but the Government is helping to close them. Why did it bring in a rates re-evaluation process at the tail end of a recession and increase rates by up to 100%? Even the Tories in Britain brought in rates relief for shops of a certain size in the recent budget. We should cop on and not pay lip service to rural Ireland but, rather, keep it alive as best we can. It will not be like it was when I was growing up in the 1950s, 1960s and 1970s, but we should retain as much of it as we can. We should adapt our planning framework to ensure rural Ireland is sustained. I thank the witnesses for their enlightening presentation. I urge them to work together on the public banking model and not to be afraid, apprehensive or defensive. We will get there if we keep going.