Willie Penrose (Longford-Westmeath, Labour) | Oireachtas source

I thank the Ceann Comhairle for allowing me to raise this important issue, namely, the necessity of developing a model or system to provide a local banking system in Ireland. I am glad to see Deputy Joan Burton in the House because she has been a strong advocate in that regard and done a lot of work on the issue.

The report by the Department of Rural and Community Development on this matter was a severe disappointment, which is an understatement. It was a stomach churning event. It was a damp squib and a kick in the teeth for many, including Deputy Joan Burton, as it appears the conclusions were arrived at first and that evidence was then divined to underpin them. It represented the dead hand of bureaucrats at their best, particularly those in the Department of Finance, as I had correctly anticipated and predicted in a number of debates and parliamentary questions on the matter in the past six or seven months.

Be that as it may, I pay tribute to Irish Rural Link, Mr. Seamus Boland and the staff - Ms Sinead Dooley, Mr. Noel Kinahan and others based in Moate - who have done so much work in bringing the concept of community banking to the fore in the debate and seeking to turn the tide on the decline of banking services in rural communities, including SME lending and relationship banking.

I read with some wry amusement the comments made in the report. Some of those involved obviously never left their ivory towers in Dublin. They started to tell us how great things were on the ground down the country.

Public banking is poorly understood in an Irish context. A public bank is emphatically not a nationalised bank like AIB. In other EU member states public banks are often municipally owned and restricted to a specific geographical area in order to promote regional development. We need such development in the midlands, across counties Longford and Westmeath, as well as in counties Sligo, Leitrim and Donegal. These banks are not for profit and can provide a valuable impetus for regional development and be an alternative to the major shareholder-driven private banks. Of course, that is the essence of the problem. Given the disappearance from the Irish financial landscape of building societies, the old Trustee Savings Bank, the ICC and the ACC which offered agricultural credit facilities, there is a clear gap in the services available between the credit unions and the big banks. But for the credit unions - the poor person's bank - nobody would get a shilling. Everybody would be wiped off the pitch.

In the light of the misbehaviour exposed in Irish banks and the financial crash about which Deputy Joan Burton has spoken so often, many commentators have suggested the big banks' monopoly of retail banking needs to be challenged by a new service provider with a different ethos. Of course, the report ran away from the real issue and attempted to disguise the fact that the Department of Finance's sole aim was to insulate and protect the State's investment in the pillar banks from competition. That is what the report is about. While it is welcome that there will be a further independent assessment of public banking, with the credit unions and An Post, the Labour Party, including, I am sure, Deputy Joan Burton, will be seeking an assurance that it will be acted on by the Government and that the credit union movement will be given a clear road map for how it can develop and expand its services to the community.

I take the opportunity to point out that what is being asked of the Government is not a State investment of €170 million in a German bank. The Department rushed that out to The Sunday Business Post. I knew the answer that was going to come yesterday. It struck first and got its retaliation in first. It is about the Government developing a new culture in Irish financial services to get away from the greedy maximisation of profits by the big banks. That is what the Sparkassen group is most preoccupied with - developing a new culture in Irish banking - but, of course, our friends in the Department of Finance do not want to have anything to do with it. I know from the bankruptcy legislation how it behaves. I was there. It tried to strangle all ideas coming from outside the system. During the past few years it has come to confuse the national interest with the interests of the AIB-Bank of Ireland duopoly. We have seen the credit union movement which has less than 30% of its assets in loans blocked in expanding its services. The Central Bank has a tin ear when it comes to listening to the credit unions. We see this behaviour in how it approached Irish Rural Link's proposal. It is scandalous. Why not introduce the Sparkassen model and use it to complement An Post and the credit unions and give us a new method and vehicle for ensuring small businesses, farmers and others involved in agriculture can securing funding for their vital businesses in rural Ireland?

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