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

According to the Public Banking Institute, "[a] public bank is a chartered depository bank in which public funds are deposited. A public bank is owned by a government unit - a state, county, city, or tribe - and mandated to serve a public mission that reflects the values and needs of the public that it represents." Public banks come in a variety of models. A public bank might be capitalised through an initial investment by the city or state, as well as through tax and fee revenue. A public bank, like a private bank, can take tax revenues and other government income as deposits, create money in the form of bank credit, and lend at very low interest rates and that is a critical thing which the Minister of State overlooked. Where private banks are committed by their business model to take advantage of low interest rates by charging higher rates to borrowers, which the Minister of State also forgot to mention, a public bank has no shareholders to pay and so can pass the low rates onto borrowers such as public agencies, local businesses, residents, and students.

Public banks can also partner to underwrite or guarantee the loans of local banks to fund projects that might otherwise not be funded. Such partnering with local banks shows that public banks can be partners, as well as competitors, with local private financial institutions. Public savings banks, such as postal banks, typically offer individual savings accounts, savings bonds, remittances and other services. Around three out of four postal systems worldwide offer such banking services. Public banks are a major financial force in Germany, the EU’s most successful economy.

The need for public banks or a third banking force has long been recognised in Ireland and the Labour Party has been its proponent. The Fianna Fáil and the Labour Party programme for a partnership government 1993-1997 stated that the coalition would "develop a vigorous third banking force from within the State sector by merging the ICC Bank and ACC Bank and by seeking a merger of the new entity with the Trustee Savings Banks". The so-called rainbow coalition was also committed to creating a third banking force, but the proposal was never implemented.

Ireland is now one of the very few countries which does not have public banks that would lend on favourable terms to SMEs. The Irish economy is perilously dependent on a small number of multinational companies for our economic growth. While Enterprise Ireland does a fine job in supporting domestic industry, access to affordable finance is still a major obstacle to the development of SMEs. A public bank would be in a position to provide affordable finance for SMEs and could also offer cheap banking services through the post office network for the many people in rural Ireland who have difficulty accessing such services.

We have a great opportunity in Ireland to strengthen regional development with an alternative in the form of a public bank that would not only reshape our financial services to the real economy but also provide increased financial inclusion to all wherever they live. Does this Government have the political will to think not just of the next election but to act like statesmen and think of the next generation of industry, entrepreneurs and small businesses?

The bureaucratic reply that the Minister of State, Deputy English, gave on behalf of the Minister of State, Deputy D'Arcy, tells its own tale and is revealing of the mindset in the Department of Finance. It is adamantly against any prospect of introducing competition for the pillar banks. That is the central and key issue which is blocking the progress of a worthy proposal of a public bank.

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