Michael Noonan (Limerick City, Fine Gael)
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It is worth recalling the intention of the Government in this regard. The financial services industry in Ireland has come through a major crisis and every institution involved has been damaged, including the credit union movement. The Government wants to ensure that the credit union movement is restored in health and reputation and that it carries out the functions it originally carried out. We are prepared to have a legislative framework within which credit unions operate and we are prepared to use a great deal of taxpayers' money in ensuring they are properly provisioned and, in particular, that those credit unions whose reserves are depleted are restored to good financial health. Then we want to position them in order that when they are restored to health they can expand their services in the future, but we do not want to push it too far in the first instance. I have outlined the reason it would be difficult currently for credit unions to provide the kind of front-of-house services that Deputies have suggested: the underlying architecture is not there to do that with safety. Our first principle must be to protect the savings of the people who put their money into the credit unions. If we go into shared services at front-of-house there is a risk. There is no inhibition in law - the credit union movement knows this - to sharing back-office operations. It is fully aware of that and we will encourage it to do so. When it comes to discussing whether credit unions should come together, we will certainly encourage the use of shared services and back-office operations. As to whether I would be prepared to move forward in this regard, I would like to see this bedded down first and if the credit union movement, or the stronger credit unions out of the totality of credit unions, brought forward a scheme to provide front-of-house operations, we would look at that on its merits, but at present I am not going to give a commitment to that for reasons of prudence but also because, as finance Minister, I am not the only entity involved in this. The Central Bank has a serious role in the how the credit unions operate.

This brings me back to Deputy Doherty's question on what might be the basis of a misunderstanding with regard to the difference between what I am saying and how the credit unions briefed him.

It possibly arises from section 12(3) where it states: "For the purposes of subsection (2)(a) the Bank may prescribe investments in which a credit union may invest its funds. In prescribing matters for the purposes of subsection (2), the Bank may also prescribe other matters in relation to prescribed investments, including any of the following:". The concern is with the first clause, (a), of subsection (2), which specifies the classes of investments the credit union may invest in. What the credit unions want is a specific inclusion there that they can invest in State projects, local government projects or PPPs. The Bill is vesting that decision in the Central Bank. I do not know what the Central Bank's intention might be but it is its function under the Act to decide on the classes of investment.

The section continues to outline the other measures. The Deputy can read it himself. The bank cannot act unilaterally or in an arbitrary way. Under law it has to consult the credit unions before they prescribe the classes. It is up to the credit unions to make the case. If one large credit union wants to be involved in a PPP and it has the resources to do it, and it is not money on-call - it is surplus money - I do not see why the Central Bank would not allow it to do that. The Central Bank will be the actor, but not arbitrarily. It will have to consult with the credit union movement before the bank outlines a schedule of classes of investment that would be appropriate for the credit union movement. That is the basis for the misunderstanding. That is the space we are in.

In response to Deputy Boyd Barrett's question, the primary purpose is to protect the investor. We must protect the savings of the 2 million plus people who claim to be members of the credit union movement. That is the primary purpose of everything we are doing, while at the same time freeing up the credit union movement to carry out additional services, but those which would not put the savings of their members at risk. The Deputy referred to the for-profit sections and the banks but the credit unions do pay a dividend and their members are shareholders. They do not operate on the basis that they want to lose money. They work on the basis of profit as well and they distribute their profits to their shareholders. We should not forget that. That is the model.