Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank all the Deputies who contributed to this very constructive Second Stage debate in which the importance of the credit union movement in Ireland was highlighted. As stated in my initial contribution, the Credit Union Bill 2012 is an important step towards placing the Irish credit union movement on a sustainable path for the longer term. The Government recognises the importance of the credit union sector as a volunteer co-operative movement and the distinction between it and other types of financial institutions.

The Government's commitment to implementing the report of the Commission on Credit Unions is backed by the solid, early delivery of major elements contained therein. These include the publication of the Credit Union Bill 2012 which implements over 60 of the commission's recommendations, the commencement of fitness and probity measures and the requirement for contributions from credit unions under the deposit guarantee scheme and the establishment of the credit union restructuring board, ReBo, on an administrative basis - pending enactment of the legislation - in order to ensure the early commencement of its work. The Bill sets out a package of measures which were agreed to by all stakeholders on the commission and which will underpin the stability of the sector into the future. The Irish League of Credit Unions had the largest representation on the commission and agreed to all of its recommendations.

The Government has already shown its commitment to credit unions by setting aside €500 million to ensure the viability and long-term sustainability of the sector at a time when the country's resources are stretched. The provision of such funding, with necessary changes to prudential and governance requirements, is aimed at bringing about a strong and stable credit union sector in the future. This would be an outcome that would be in the interests of stakeholders.

I will reflect on the matters to which Deputies referred, including those raised on behalf of the Irish League of Credit Unions, and look forward to a constructive debate on Committee Stage. However, there are one or two matters with which I would like to deal now. The first of these is that there appears to be a major misunderstanding with regard to the application of banking legislation to the credit union movement. A theory seems to have developed to the effect that the Central Bank never had a role in regulating credit unions, that the Bill is conferring such a role on it for the first time and that rules which previously only applied to banks will now apply to credit unions also. That is not true. The Central Bank Acts already apply to credit unions. For example, the Central Bank Act 1942 sets out the role and responsibilities of the Registrar of Credit Unions, the Central Bank Act 1971 specifically exempts credit unions from the requirement to hold banking licences and the Central Bank Reform Act 2010 applies fitness and probity provisions to credit unions.

The Commission on Credit Unions recommended that section 184 of the Credit Union Act 1997 regarding the Central Bank Acts be reviewed. Among other reasons, it is necessary to unify the application of the Central Bank Acts in order to allow the commission's recommendations to be implemented. I refer, for example, to the application of administrative sanctions to credit unions, the ability of credit unions to appeal directions to the Irish Financial Services Appeal Tribunal and the need to clarify the level of recourse to the Financial Services Ombudsman available to credit unions and their members. Most of the changes outlined in the Bill give to credit unions provisions they have sought. The theory that the Bill involves applying the Central Bank Acts that are applicable to banks to credit unions is simply incorrect. I do not know from where that theory came.

In the context of the term limits being imposed on certain officers of credit unions, I want to use the Bill to introduce the principle of renewal. We are all aware of organisations which became moribund because there was no change in personnel at the top. One of the biggest reforms in my party was introduced by the late Dr. Garrett FitzGerald in respect of officers of branches. These individuals had previously served indefinitely, but a change was introduced to our constitution to the effect that an individual could only serve as an officer for three consecutive years. This resulted in the required renewal. Many members will be familiar with GAA clubs throughout the country which retain groups of gentlemen who discuss the make-up of teams outside the chapel gate each Sunday. These are usually not the clubs that win club matches or county championships.

Those which can renew themselves are more vital. It is also reasonable to introduce a renewal provision to the credit union movement. The issue is not the number of years, one we can discuss on Committee Stage, but the principle of renewal of the officer boards of credit unions.

One Deputy mentioned the financial transaction tax. What is being discussed in Europe is the payment of stamp duty on share transactions and perhaps other financial instruments. We already do this in our tax laws. Share transactions in Ireland are taxed by way of stamp duty at a rate of 1%. What is being proposed is that something similar be introduced for share and other transactions, with a starting point of 0.1%, perhaps increasing subsequently. We are not out of line with what is happening elsewhere in Europe. However, we are not participating in the enhanced co-operation mechanism in which other countries are participating because we do not want to create a situation where the 33,000 jobs in the financial services sector in Ireland would be put at risk of transfer to a more benign tax regime in London. That is the only issue involved. We do not have a problem in principle with a financial transaction tax.

I look forward to a very constructive Committee Stage debate. I invite Deputies to table any amendment they consider appropriate and it can be discussed on its merits.

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