Finian McGrath (Dublin North Central, Independent) | Oireachtas source

I am glad to have the opportunity to speak on the Bill, which I welcome. I also welcome what is an important debate. I feel strongly that we need change and reform. We must constantly be vigilant and efficient when dealing with our financial services. We have to learn from the huge mistakes of the past and bring a bit of common sense and professionalism into our financial services, banking and the broader economy. The days of the gombeen men and women have to go, and reform is the only way that counts. If we do not do this, we let the country down but, above all, we let the citizens of the State down. It is important that we say this in regard to the legislation.

The Bill provides for the introduction of a number of changes to two codes of legislation, the Friendly Societies Acts and the Industrial and Provident Societies Acts. The Bill provides for the closure of registration of new friendly societies. The amendments in regard to co-operative societies are aimed at easing the regulatory burden on co-operatives and making the option of examinership available to the sector. These are positive measures in the Bill.

As I said in my introductory remarks, it is important that we do not take our eye off the ball when it comes to developing the Irish economy, financial services and, in particular, the SME sector. We have to look at this as a national asset and a wealth that we possess. Small businesses that employ between five and 20 people are at the heart of the economy, and they need a break and a lift. Issues such as commercial rates have to be dealt with. The important thing in regard to the SME sector is its results and the number of jobs it supplies, even in the downturn. We have to make this a part of the strategy. We regularly hear members of Government saying that the only game in town in order to get out of this mess is jobs, jobs and jobs. While I agree with that, I also feel that we have to focus strongly on the SME sector of the Irish economy.

We cannot rely totally on foreign investment. We have a very constructive and open policy in regard to the 100,000 to 120,000 jobs that exist as a result of the foreign investors. However, we need to realise that we have four times that number in employment in the small and medium enterprise sector. Given the Minister of State's specialisation in this area, I believe he will agree with the points I am making. Small businesses are making a massive contribution but they are also delivering on the ground in the local economy. That is the important thing. We need to up our game and, as we do so, we need to ensure that we assist these small businesses to get off their knees and get through these very difficult times.

It gets up my nose when I hear some people talking about particular aspects of different industries. We had this recently in regard to the broader debate on health and the alcohol issue. However, people often forget that 92,000 jobs are indirectly or directly connected to the drinks industry. This is something we must also consider. We must not blame people who want to go out and have a drink in moderation and enjoy life. Moderation is everything in life, and that is how people should approach it. It is also important to look at new ideas in regard to developing the economy.

Friendly societies developed as part of the mutual self-help movement in the 19th century, which included co-operatives, building societies, savings banks, credit unions and trade unions, and those societies are registered generally under the Friendly Society Acts 1896 to 1997. The various objectives of those societies that were registered included permitting the carrying out of financial activities, including the provision of financial benefits in regard to illness, old age or death and savings and loan activities, health insurance, life insurance and personal loans. As State intervention increased in the 20th century for the common good through the introduction of State-sponsored social welfare, coupled with the growth and development of the insurance business as an industry sector, the social purposes of the friendly societies begin to decline. There are currently only 35 of those societies active, of which six have been in operation for over 100 years, and many are at a relatively low level of activity. Just over half are involved to one extent or another in the provision of financial services or benefits to members, and these are mostly medical and death benefits.

The five largest societies, in terms of both assets and annual income, hold assets of more than €150 million, and their volume of business in 2011-12 was approximately €70 million. Four of these societies have a predominantly public sector membership, two offering what might generally be termed health insurance - St. Paul's Garda Medical Aid Society and the Prison Officers' Medical Aid Society, both registered with the Health Insurance Authority as restricted membership undertakings. The fifth is the last remaining active specially authorised loan society, a society which is authorised to grant loans to members. In all, 16 societies hold assets in excess of €1 million.

There are just six societies that have been on the register since 2000, none of which is involved in the provision of financial services for their members.

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