Denis Naughten (Roscommon-South Leitrim, Independent) | Oireachtas source

I move amendment No. 7:

In page 15, between lines 17 and 18, to insert the following:"(b) a class or classes of saving schemes operated by a credit union in respect of which payments under this section are to be made,".

I welcome the Government amendment to provide for the inclusion of credit unions in the 15% scheme, whereby credit union loan repayments may be made directly from a person's social welfare payment. I hope the scheme is publicised widely once the legislation is enacted. It might encourage people to go to their local credit union rather than a loan shark in the run-up to Christmas. People are paying astronomical sums in interest on loans from unregulated lenders. They should be encouraged to use their local credit union where possible, particularly at expensive times of the year, such as a child's first communion, Christmas and so on.

There might be a need to examine the wording of my amendment to ensure it is legally sound but the Minister of State has the full resources of the Department behind him to do that. As I said, when this Bill is enacted, where a social welfare recipient takes out a specific type of loan with the credit union, the latter may, with the customer's agreement, set up a direct repayment from his or her social welfare payment. That is a very attractive scheme both from the point of view of the social welfare recipient and for credit unions because it makes it easier to collect the moneys. I am seeking something slightly different by way of this amendment, namely, that as well as facilitating loan repayments, credit unions should be enabled to operate a savings scheme which would involve taking moneys directly from people's social welfare payments. What I have in mind, in particular, is a seasonal scheme. Every autumn, for example, the Department begins issuing fuel allowance payments to eligible recipients. This year, the payment is €20 per week, increasing to €22.50 from 1 January. For many people on social assistance payments, it is a great boost to get this additional money but not all of them use it for the purpose for which it is intended. The Department, through the community welfare service, regularly has to issue payments to families to buy €100 worth of kerosene to ensure they can heat their homes. These types of situations arise because the fuel allowance is paid weekly and must be saved up over a period by the recipient before he or she can pay to fill the oil tank. Moreover, buying oil in larger quantities ensures one gets a better price, which also applies in regard to bags of coal. Many social welfare recipients use solid fuel because it can be bought on a weekly basis rather than in bulk. Indeed, the way in which the fuel allowance payment is administrated means there is an incentive to use solid fuel.

I am proposing that the credit unions be allowed to come to an arrangement with fuel companies whereby the credit union would collect a customer's fuel allowance each week and put it into a designated account. When that person requires a fill of kerosene, the fuel company would get the payment directly from the credit union. We need to be more proactive in this area rather than simply leaving people in a situation where they have to borrow money to fill their oil tank. Moreover, such a scheme would have the added advantage of encouraging an ethos of saving among those who participate. It might bring an additional cohort of people under the credit union umbrella who are not there now. I have spoken to a number of oil company representatives and they are very amenable to such a scheme. I had considered the advantages of the companies themselves setting up a scheme but there are inherent risks in that should a small operator, say, go to the wall. That would leave people in a very vulnerable situation and without access to fuel. We have had those types of problems in the past, even with organisations that were licensed by the Central Bank.

Rather than going down that road and creating another layer of bureaucracy, I am asking that the Minister facilitate the credit unions in coming up with a novel savings scheme such as I have suggested, without having to wait until we change the law next year to do it. As the Bill is currently drafted, the new arrangements for credit unions relate only to borrowings. My amendment seeks to introduce a savings element that could be tied in with the fuel allowance payment, the major benefit of which is that people would be able to buy fuel in bulk and thus get their fuel at a better price. Such a scheme would benefit people by offering security in terms of their ability to heat their home and it would also encourage an ethos of saving which will stand to people for the future.

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