Beverley Flynn (Mayo, Fianna Fail)

I thank Deputy Sherlock for giving me some additional time. I welcome the opportunity to speak on this Bill. Over the last 18 months we have been in the middle of an economic nightmare. We have not since the 1930s seen anything similar to the collapse of the banking system, which was caused, as everyone acknowledges, by reckless lending and inadequate regulation. The consequences for the country and for every citizen have been enormous. There has been much comment from all sides of the House about the measures contained in this Bill. There have been calls for greater regulation and for people of substance, with adequate training and experience in the area of regulation, to be brought in to deal with this problem.

We are dealing today with the Central Bank Reform Bill, which has been introduced to address past inadequacies in regulation and restore confidence to our economy. It is particularly important that we go about rebuilding confidence among ordinary citizens because, if we are to rebuild our economy, it is important that people believe we are coming to the end of the recession and that the comments over the last number of weeks by the ESRI about the return of growth in the second part of this year are correct. We are seeing positive signs, as indicated by the Minister for Finance this week when he stated that exports are rising and car sales are increasing, that there is an improvement in the economy, which is to be welcomed.

I commend the Minister for Finance on the actions he has already taken. He has instilled confidence in the people, who believe he has a strong command of his brief and is taking the issues seriously. I welcome the appointment of the new Governor of the Central Bank, Professor Patrick Honohan, and the new Financial Regulator, Mr. Matthew Elderfield. In the short time since they were appointed, they have already begun to build a new regulatory regime and people have confidence that something is being done about this problem. My constituents certainly believe the correct steps are being taken. Now that we have gone to the trouble of putting these experts in charge of a new regime, there is no point in criticising them at the outset. We must let them get on with their jobs because creating a decent regulatory regime will probably require the introduction of tough measures. In regard to Deputy Sherlock's comments on credit unions, we must let the regulator get on with his job. Public confidence is growing in Ireland and it has been recognised internationally that the decisions we have taken were the correct ones.

The Bill before us proposes to reform the structures of the Central Bank and establish a single, fully integrated structure with a unitary board called the Central Bank commission. This body will be responsible for the stability of financial systems, prudential regulation of financial institutions and the protection of consumer interests.

The regulatory regime clearly did not work well in the past. The former Governor of the Central Bank, who reported to the Minister for Finance, was not paid sufficient heed when he issued warnings about the direction we ultimately took. Even though the issue was raised before the Committee of Public Accounts, it did not receive the attention it deserved. For this reason, I welcome the Bill's provisions on enhanced accountability and oversight mechanisms. The annual statement on regulatory performance, which is to be presented to the Minister and the Houses of the Oireachtas, will provide an early warning mechanism for Members. I welcome that the Central Bank will have to produce a strategy statement every three years. Regulation and accountability will be further strengthened by the international peer review of regulatory performance which will be conducted every two years. The combination of these measures will create a system that ensures true accountability to the Minister and this House through Oireachtas committees. The Governor of the Central Bank will have to come before committees to be questioned on these mechanisms. This Bill strengthens our hand as a country and puts in place a system of which we can be proud.

Ordinary hard-pressed taxpayers who are already funding the recapitalisation of the banks and whose pay-packets have suffered severe losses do not want to be saddled with the cost of regulating our financial institutions. Regulation, which cost €60 million in 2009 alone, is extremely expensive. The enhanced regime we will be putting in place will cost in the region of €78 million. I welcome, therefore, the Minister's plan to make the financial services industry bear the full cost of regulation. At present, the industry covers only half of this cost but this Bill provides for the power to claw it back through levies on financial institutions. This will be a task for the new Central Bank commission and I suggest it should make it a priority because people need to see that financial institutions are paying for the regulation that has been made necessary by their failure to self-regulate in the past. I can identify several areas which would benefit from the €78 million being spent on regulating the financial sector and I ask the Minister to raise this matter as a priority with the new commission.

It is important that we recognise the positive developments. Too often, the only comments we hear in the media or this House are negative. We tend to talk ourselves down in this country but we must acknowledge that we are heading in the right direction both in terms of regulation and as an economy. The ESRI forecasts a return to export-led growth in the second half of this year which will lead to the creation of 20,000 jobs next year and 45,000 in 2012. Ordinary citizens need to be convinced that we are coming to the end of the recession rather than be told that doom and gloom will prevail into the future.

The Minister's actions have been endorsed by the European Central Bank. Deputies opposite have offered their own solutions to our current mess but the favourable reaction we have received from the financial markets reflects a recognition that the approach being taken by the Government is the correct one. I dread to think where we would be economically had the policies of Opposition Members been followed. They are in the fortunate position of being able to propose policies which they know will never come to fruition. Without having to face their policies' drastic consequences, they can offer different viewpoints every day of the week. When one is in Government, however, one has to implement a policy that one hopes will be successful. We must ensure that the decisions we take are successful when they are implemented.

We are already seeing evidence that the Central Bank Reform Bill 2009 is a step in the right direction in the proactive stance taken by the Financial Regulator on certain very public cases. I support the entrepreneurial spirit of those who have done so much to create employment in this country. If we are to return to growth, such people will be needed in the insurance industry, the construction sector and export businesses. However, the financial services industry, about which I know quite a lot, requires strict regulation and once we put in place the necessary measures we must let the regulators get on with their jobs. I commend the Bill to the House as a step in the right direction and I congratulate the Minister on introducing it.

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