Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

On behalf of the Government, I thank all Deputies for an engaging discussion on the issue of strengthening the credit union sector.

It is clear that there is agreement on the importance of the credit union sector and the vital role it plays in providing much-needed funding to local communities. The role is even more important given the impending withdrawal of Ulster Bank and KBC Ireland and the closure of many bank branches. The goal of the Government is to help and support the credit union sector in continuing to become a strong and resilient movement in Ireland. For that reason, we will soon be issuing proposals on foot of the completion of the programme for Government review.

The Government has proven that it will act to support the sector. Priority legislation was introduced in late 2020 to allow credit unions to hold virtual general meetings. Legislation is also being progressed to bring the providers of personal contract plans, PCPs, hire-purchase and consumer hire agreements within the regulatory remit of the Central Bank. This legislation is supported by the credit union movement. Nineteen credit unions have been approved to provide loans to SMEs under State-sponsored schemes managed by the Strategic Banking Corporation of Ireland, up from zero at the start of the year. Many credit unions have developed retrofit lending products to dovetail with State supports for retrofit managed by the Sustainable Energy Authority of Ireland. I am delighted that credit unions are playing a key role in what is one of the most important capital investments in the history of the State and much needed and wanted by the public as well.

Levies which fall to be decided by the Minister for Finance have dropped from €12 million in 2019 to €5.3 million in 2021, a fall of 56%. While the Government recognises the positive intent of Deputy Harkin's Bill, it is also aware that the Bill does not provide solutions to key challenges facing the sector, such as growing lending, reducing fragmentation or developing collaborative projects. The Deputy's Bill seeks to change fundamentally the role of the Central Bank as regulator in a variety of ways, including by assigning the Minister for Finance a role in setting minimum capital requirements for the credit union sector. This strays far from international best practice. The reasons for Central Bank independence are tried and tested. It must be allowed to carry out its duties as regulator in a free and independent manner, without political or sectoral interference.

The Bill also seeks to assign to the Minister for Finance a role in setting a strategic plan for the sector, with the Central Bank reporting annually to the Minister on this plan. The Government is of the view that it is not appropriate for the Minister for Finance to set out a strategic plan for the development of the sector. This is a matter for the sector, its directors and, ultimately, for its members who own the credit unions.

The Government amendment to have the Bill read a Second Time in nine months is the appropriate course of action. We should not lose sight of the commitment made in the programme for Government to carry out a review of the policy framework of credit unions. The Government's review considers and encompasses well over 100 proposals from a large sample of stakeholders, including representative bodies, recommendations from two detailed reports produced by the CUAC and feedback from extensive stakeholder engagement which has been carried out as part of the review. It is important that time be given to review and consider the proposals emanating from the programme for Government review. I can confirm today that the review will be completed within the coming weeks. The consultation has involved meeting representative bodies and other stakeholders and potential legislative amendments are being considered as part of the review. However, the Government does not wish to raise unrealistic expectations regarding the impact of potential legislative amendments. Neither legislative amendments to the policy framework nor Deputy Harkin's Bill, debated here today, will solve the financial and business model challenges facing credit unions today. The Government, therefore, is not supporting the moving of this Bill. Instead, we seek that the matter be considered by the House in nine months after important work has been done on the programme for Government review of the policy framework.

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