Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I welcome today's debate. Sílim go bhfuil an cheist fíorthábhachtach seo á phlé againn ag an am ceart. Ní hamháin gur chóir go mbeadh ghnóthaí beaga in ann creidmheas eacnamaíochta a fháil, mar atá luaite go mór sa díospóireacht go dtí seo, ach ba cheart freisin cabhair a thabhairt don ghnáthdhuine amuigh ansin atá ag cuardach creidmheasa le cibé rud a dhéanamh - gluaisteán úr a cheannach, páiste a chur ar scoil nó dul ar aghaidh sa saol. Tá sé soiléir le cúpla bliain anuas go bhfuil daingniú nó cúngú tagtha ar an méid creidmheasa atá ar fáil do ghnóthaí beaga. Cluinim é sin i mo Dháilcheantar go minic, agus silím gur amhlaidh an cás do Theachtaí i gceantracha eile. Tuigim go bhfuil na gearáin céanna ag teacht isteach go dtí a gcuid oifigí is atá ag teacht isteach go dtí mo oifig. Níl gnóthaí beaga nó gnáthdhaoine ábalta creidmheas a fháil ó na bainc nó na comhair creidmheasa. Baineann cuid den fáth leis na srianta atá curtha orthu ag Banc Ceannais na hÉireann. Tá na srianta atá curtha ar na comhair creidmheasa, mar shampla, ag cur isteach ar ghnáthdhaoine amuigh ansin.

That being said, the tabling of the motion by the Fianna Fáil party is right. This is the proper time to have the debate on access to credit. Not only SMEs but many ordinary people seek access to credit in the run-up to Christmas and we are not too far away from that. How to pay for ordinary bills or presents is something on the minds of many people. This is a time when many people access the local credit union or financial institution. Unfortunately, some will go to moneylenders, legal and illegal, to access credit at this time of the year.

However, no constituency in the State has not been inundated with case studies of small to medium-sized enterprises, SMEs, that are struggling to find credit from banks or financial institutions with which they had long-standing relationships. While such enterprises were being drooled over by the financial institutions a few years ago with regard to the provision of credit, this has all dried up. Moreover, there has been a massaging of the figures that have been presented publicly heretofore. However, as the Joint Committee on Finance, Public Expenditure and Reform has dealt with the issue of how overdrafts are being turned into long-term loans and presented as new lending, I will not labour that point.

This issue must be put into context of the recent past. A notable economist came to these shores in recent days and spoke of a lost decade but one need only go back half of that decade, that is, to 2008 when the banking crisis started. The efforts that have taken place heretofore have not resolved the problems in the banking system and five years later, it is not possible to call it a normal banking system. As for the €64 billion of taxpayers' money, Members are familiar with all the pain and hardship that ordinary people throughout the State have been obliged to endure as a result of the decision that was taken by the previous Government, which unfortunately has been supported by the current Administration with regard to the injections it has made to recapitalise the banks. That money has not resulted in a new dawn for the existing financial institutions, which have not yet returned to normal practices. The targets that have been set by the Government for lending to new businesses have not materialised or have not been reached. As for the targets for dealing with mortgages, the different initiatives, going right back to the Keane report and other reports, have not borne fruit and the mortgage crisis has got out of control. It is to be hoped this has started to wane and the tide has begun to turn on that matter. However, the withdrawal of two banks from this State this week demonstrates the crisis is far from over and still persists. While it might not be as talked about and deposits might not be fleeing from the banks, the banking system in this State remains broken. The State will not have a proper banking system for as long as the current level of mortgage arrears continues.

I will not just focus on mortgage arrears but refer to the problem with this State. Deputy Michael McGrath gave the analogy of credit being the fuel that drives the economy and that is 100% correct. It is the oil that lubricates the engine but one must be careful as to the type of oil one puts into one's engine because were one to put in the wrong type, one could do serious damage to it. From the point of view of the State, credit is needed, as is a banking system that is properly able to maintain the supply of credit in the economy. However, it must be sensible credit and it must be sensible lending. One reason that banks are not lending at present is because there is far too much debt in the Irish economy, be that business debt, personal debt or banking debt. This is where one must get to the crux of the matter and it takes me back to the point on mortgage arrears, which is that for as long as one in four domestic mortgages are in arrears, the State will not have a normal banking system. Until the banks begin to get through this message that they must begin to take action, one definitely will see the aforementioned lost decade for the economy.

My party has proposed amendments to the motion to provide a more rounded debate today, but absent from it is the context of what has happened to the €64 billion that has been injected and committed by the Government. Unfortunately, even though some rescheduling has taken place, every penny of that recapitalisation is to be paid by Irish taxpayers. In the context of credit, the motion does not simply speak to the SME sector but rightly refers to moneylenders. However, it does not mention the issue of large credit providers in the State, namely, the credit union sector and it is important to note the significance of that sector in society, which I consider to be of systemic importance today. I believe there is a need for an independent examination of how the Newbridge Credit Union issue was handled by the Government, the Central Bank and the special manager, as I believe they made a dog's dinner out of it, to say the least. It took 22 months to reach a point at which the credit union was to be liquidated within days because of a run on the credit union. This run on the credit union is being explained away as a result of a report that was carried in The Sunday Business Post. This issue has not been managed properly and lessons must be learned in this regard. I welcome the Minister's statement earlier today to the effect that this issue was unique and he is not contemplating that this will affect one in four credit unions across the State. Indeed it is unlikely that other credit unions will be dipping into State funds in respect of restructuring in the future, where necessary.

However, I have been alarmed by the contents of the affidavit under the heading stating liquidation is not in the public interest. The affidavit explains the reason for this and refers to Newbridge Credit Union not being systemically important. Indeed, it goes on to state that the overall size of the credit union sector is not of a size to generate serious systemic issues in Ireland under normal circumstances. Consequently, the credit union is not systemically important and it then only becomes an issue because the Central Bank starts to tease out that the credit unions have €7.1 billion in deposits in the banks and were an issue to arise with Newbridge Credit Union, it could fall onto other credit unions and then those credit unions would withdraw their money from the banks. My problem with this is it appears to be not about the credit union sector itself or its democratic importance and the role it plays in Ireland, but actually about the impact it will have on the banks. In fact, it is about saving the banks at all times.

As for moneylenders, I welcome the reference in the motion, as Members are aware that people are being driven into the hands of moneylenders. They will have noted that 25% of customers have experienced difficulties in making repayments in the past 18 months with 63% of those reporting that repayment difficulties were caused by a drop in household income. While many people are accessing credit from moneylenders or credit unions simply to try to get by and pay bills, I note I have brought forward legislation on this issue previously. In 2012, some 46 moneylenders were licensed in this State, of which 29 charged an annual percentage rate, APR, of more than 100%, 14 charged APRs of more than 150% and one moneylender charged an interest rate of 210%.

In conclusion, I refer to the hope mentioned by the previous speaker. I believe this country needs a good dose of hope because sometimes, the only thing that keeps people going is the hope they will see the light at the end of the tunnel. Many small to medium-sized enterprises and individuals have been clinging onto that hope and hopefully it will be realised in a real fashion and these people and enterprises will see the light sooner rather than later and will see clarity and real tangible support at the end of a long dark road. However, as for welcoming the Minister's statements on the State bank or the National Pensions Reserve Fund, to borrow a phrase, one cannot rely on statements. Three years on, that money is still lying in the National Pensions Reserve Fund. A bank has been liquidated, other banks have been merged and banks have withdrawn from the State but yet, three years later, more than €6 billion is lying in the National Pensions Reserve Fund and Members still only have promises in manifestoes and statements from the Minister. It is past time to act.

See this speech in context