Seán Crowe (Dublin South West, Sinn Fein) | Oireachtas source

Ireland is currently facing one of the worst economic crises in living memory. That crisis was caused by unbridled capitalism, the gross mismanagement of the economy by successive governments and a complete lack of any serious regulation in the banking sector. It is completely understandable that Irish citizens are extremely angry that their taxes have been used to bail out gamblers, speculators and private banks, whose managements are rewarded by obscenely generous salaries and pensions. However, one institution has stood head and shoulders above the rest during these difficult times, namely, the Irish credit union movement. To most people, the credit union is not just a financial institution but a grassroots movement that was built on volunteerism and is at the heart of many communities across Ireland. The 493 credit unions affiliated to the Irish League of Credit Unions across the 32 counties have a total membership of approximately three million. Credit unions affiliated to the league hold almost €11.7 billion in member shares and deposits and have approximately €5.5 billion on loan to members at the moment. Most of us would agree that with its success over the years in serving members' needs and its impressive penetration levels within Irish society, the Irish movement is an international success story in credit union terms.

On a daily basis we are bombarded with stories of former bankers, civil servants and Ministers living a lavish champagne lifestyle, with some collecting pensions of up to €500,000 per year despite their role in creating the social and economic crisis which has shaken Ireland to its core. Credit unions are not perfect and individuals could and did make mistakes. It would be naive to suggest that the movement was unaffected by the boom; we have all heard stories of unsustainable loans being advanced for properties. However, the main point is that the credit unions themselves would be the first to admit that the regulatory context in which they operate is in need of real reform. In fact, the credit union movement has campaigned for years for radical reform of the regulatory structure. The Irish League of Credit Unions was an advocate for the establishment of the Commission on Credit Unions.

Some of the issues addressed by the aforementioned commission are not reflected in the Credit Union Bill, and one such issue is that of shared services. The sharing of services, which was referred to by Members from all sides of the House, offers credit unions the opportunity to benefit from economies of scale and allows them to access expertise that they might not have the resources to engage individually. This may become increasingly important in the future given the increased complexities and running costs which could be expected from a modernised regulatory framework and enhanced service offering. While sharing services is to be encouraged as a mechanism for increasing economies of scale and promoting co-operation between credit unions, it should not expose credit unions to undue risk. The commission recommended that shared service arrangements be established by legislation, and that recommendation must be taken into consideration.

Credit unions should lead the way in assisting the Government in a financial inclusion agenda. The new Bill should clearly enable credit unions to offer electronic payment accounts. I do not know why the Government would be opposed to this development; perhaps the Minister will address that issue in his reply. Credit unions should also aim to provide for the economic and social goals of members and their wider local communities. Credit unions are in an ideal position to play a key role in the provision of social lending and the promotion of financial inclusion. Social lending involves the provision of loans to local enterprises and voluntary organisations to develop social infrastructure in order to provide affordable debt funding for community enterprises that can operate on a self-sustaining, commercial basis to create jobs, promote economic development and otherwise improve social conditions.

Ordinary hard-working people in Ireland are at economic breaking point. Families have lost another generation to emigration, which is at a level we have not seen in decades, and nearly every household is scared stiff of what is coming down the track in the next budget. The social and societal problems that drove the creation of the credit union movement, including high unemployment, poor housing, poor health, emigration and spiralling debt are again firmly embedded in many of our communities. However, credit unions are ready and willing to come to the aid of ordinary people. They can and should be supporting job creation, community-based enterprises and socially useful schemes. In my own constituency of Dublin South West there are areas of high unemployment and social exclusion, but social lending by credit unions could have a strong impact in reducing many of our serious social and economic problems. The Bill should enable credit unions to provide funding to Government-guaranteed schemes and job-generating projects with a social benefit. Why does this legislation not allow credit unions to take part in social lending schemes?

Another issue of concern is the second loan bar, which was referred to by other Members. Reference was made to loans for birthday and Christmas presents, school uniforms, confirmations, communions, graduations and so forth, but people also seek loans to deal with unforeseen difficulties such as ill health. Given the current delays in the processing of student grants, loans from local credit unions can fill a gap. Another common reason for loan applications is for funeral expenses when there is a death in the family. In that context, some flexibility is required regarding second loans.

Why is there is an unacceptable imposition of limited terms for directors of credit unions and a prohibition on their membership of the board? These measures are unnecessary, anti-democratic and an attack on the basis of volunteerism, and they will have a negative impact, particularly on smaller credit unions. Why are we discriminating against credit unions?

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