Alex White (Dublin South, Labour)

I commend Deputy Pearse Doherty and his Sinn Féin colleagues on giving us an opportunity to debate this difficult and complex issue. The Deputy has done us a service in this regard. When I listened to the examples given by Deputies Lyons, Mitchell O'Connor and others, it struck me that moneylending is an ever-present phenomenon across the country. I do not think it is entirely confined to working-class communities, although I agree with Deputy Lyons that has largely been the case historically. A feature of the recent recession has been that moneylending has found its way into the community more broadly than ever. Deputy Heather Humphreys made the point that the need to borrow in this manner often arises from the difficult and traumatic circumstances people encounter when they burn their bridges with credit unions. They might be unable to return to their local credit union because they have defaulted on a loan. They might have tried to roll their liabilities over with new loans, only to find themselves trapped. That is when people end up going to moneylenders.

It is important for us to remember that moneylending itself is not illegal. In fact, it is legal. I do not disagree with those who talk about the need for prosecutions. However, prosecutions should and can be brought only in cases of illegal moneylending. It is important to remind the House - I am sure Deputies are aware of it - that moneylending is regulated in this country, even if it might not be sufficiently regulated. We might need to do an awful lot more, for example by amending the existing legislation. All of those points are well taken. The impression is sometimes given that the criminal justice system should round up the moneylenders. That is not the position we are in. It is not illegal. As others have said, people have the right to go to legal moneylenders and to borrow from them.

I would like to speak about Sinn Féin's proposal that the maximum rate that can be charged should be capped.

On the face of it, most would say it is a good idea. If we could make it so that people could get credit at the maximum level proposed by Deputy Doherty, I would have no difficulty supporting the Bill. The difficulty is that introducing a cap is not without consequence. This is the issue we must address. The Minister of State was clear at the outset that a cap of 40% would mean "moneylending would no longer be viable, licence renewals would not be sought and it would effectively close down the industry". That is a stark statement by the Minister of State, which I must take at face value. The explanatory memorandum of the Bill states: "A balance however must exist between a cap which prevents lenders charging usurious rates whilst, at the same time, allowing companies to charge a rate that enables them to continue to trade while factoring in the level of risk involved", which is an acknowledgement by the proponents of the Bill that a balance must be struck. I must take it seriously if the Minister of State judges that introducing this cap would essentially drive the industry underground and reintroduce the phenomenon of illegal moneylending.

I would vote for the cap of 40% if I thought that by doing so we would achieve the ends we all seek to achieve. However, I am not convinced. Deputy Doherty gives an example of a high interest rate and applies the interest rate to a reasonable example. He shows how a person would have to pay far less if the 40% cap applied and, on the face of it, that is true. However, what if the person could not obtain a loan? What if the moneylending agency did not exist? In that case, the example given by Deputy Doherty falls away because the person is unable to borrow. Deputy Doherty stressed that the introduction of the cap would have an immediate impact on tens, if not hundreds, of thousands of hard-pressed families. If I thought we would achieve that end by supporting the Bill, I would do so with a heart and a half. However, I must have regard to what has been said on the opposite side of the argument.

The challenge for the Government and all politicians is to determine the better course. We do not usually have the option of taking the ideal course. This arises in respect of the insolvency legislation, the sovereign debt issue and where to make budgetary adjustments. We cannot conjure an ideal for the people so politicians must take the better course. In this case, better education and better and fuller regulation of the market is what we should do. That is how we do least harm in this situation. For those reasons, I cannot support Bill but I commend and congratulate the Sinn Féin Party for producing it.

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