James Bannon (Longford-Westmeath, Fine Gael) | Oireachtas source

I welcome this Bill, focused as it is on amending and updating the Credit Union Act 1997. It is, of course, self-evident that the economic landscape in 2012 is vastly different to that of 15 years ago, not that this is, or should be, the prime motivator for such amendment. Natural shifts within the financial sector would be indicator enough that change must be ongoing. In a struggling economy, with confidence in banks at an all-time low, credit unions have a very important role to play throughout the country, particularly in rural areas.

The credit union movement has a place in all of Irish life, so much so that it is considered by many to be very much a national institution. This, however, is to limit the scope as credit unions operate in 96 countries worldwide. I believe the inclusion of the element of volunteerism in the running of these unions creates a valuable social as well as economic ethos, with a unique character. It is this element that increases trust and brings the credit unions into an important position in the communities they serve. This is not in any way to reduce the professionalism of the sector and the diversity of the members.

In many ways, it could be considered that the credit union movement has come full circle. While initially set up to serve the financial needs of disadvantaged individuals and groups, credit unions are now in pole position to update their focus, while retaining their initial modus operandi and incorporating an important lending element to what one could refer to as disadvantaged small and medium sized business. By this, I mean "disadvantaged" in the financial sense, given the securing of essential start-up and operational funding has been virtually closed to this sector.

While the current economic downturn ensures that disadvantaged individuals are still well served by credit unions, the credit unions also have a strong role to play in the funding of small and medium businesses. It is my strong contention that the credit guarantee scheme, which facilitates €450 million of additional bank lending, should be operated through the credit union network. This scheme empowers the Minister for Jobs, Enterprise and Innovation to give loan guarantees to a designated lending institution, and the obvious candidate in terms of facilitating local small and medium size businesses would be the credit unions. As enterprise boards and the Minister's own Department oversees the progress of the scheme, this should be more than possible.

The credit guarantee scheme is targeted at providing temporary funding to projects to address specific market failures that prevent banks from lending to some commercial enterprises or businesses by providing a level of guarantee to credit unions against losses on qualifying loans. Likewise, the microfinance fund, which is aimed at start-up, new or growing enterprises with no more than ten employees, provides loans of up to €25,000 for those who do not meet the risk criteria of commercial lending institutions. This fund is an exciting development as it will generate €90 million in lending to 5,500 micro-enterprises and support 7,700 new jobs. Again, this service should be provided through the credit unions.

It is essential, however, that any changes proposed under this Bill will create a blueprint for the sector that will ensure a structure that is planned and coherent.

Under these criteria, any potential merging of credit unions should be driven by pre-emptive action by weak or failing entities, which should not be allowed to jeopardise the interests of members in the future. In other words, while this Bill delivers on over 60 of the recommendations of the commission report, it is up to the credit union movement to maintain a sustainable credit union sector.

I was interested to hear of an initiative that very much illustrates the power of credit unions to impact in a positive way on communities. I understand that Mercy secondary school in my constituency of Longford-Westmeath, which I previously attended, will from next September offer first year students the option of replacing heavy textbooks with iPads. While, as reported prior to the start of the school year the cost of this initiative was a concern for parents they are now hopeful of purchasing the iPads by way of loan from the local credit union to be repaid in instalments of €5 per week. The elimination of heavy schoolbags will be a huge benefit to the well-being of students. Such community activity is a demonstration of the small but powerful benefit of a credit union presence in local areas.

I welcome the Government's commitment to the credit union sector in terms of the €500 million set aside to address problems therein, despite difficult budgetary constraints and competing needs for scarce resources. This puts the onus on the credit unions to undertake the necessary changes to honour their commitment to the taxpayer, whose funding they have accepted, to deliver a viable sector.

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