Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

I welcome the opportunity to bring this legislation to the House. I hope Deputies will not mind if I echo their many tributes to my predecessor, the Minister of State, Deputy Fleming, who was the first dedicated Minister of State for credit unions and who put enormous work into this Bill in collaboration with the credit union sector and the Department. I take this opportunity to again pay tribute to him. I also pay tribute to Deputy Harkin, who put forward a Private Members' Bill to improve credit unions generally. I am very open to discussing with her that Bill and how it sits with this legislation. Perhaps she would like to meet privately afterwards to go through in detail some of the policy ideas she has put forward and to engage on those and work together collaboratively. That is the real strength of the legislation to date and of the credit union movement more broadly. We would like to continue with that ethos and attitude at all stages in the House. That is certainly my approach.

I thank Deputies for their contributions. I have learned a great deal from the contributions in the House, from the different experiences Members have had with their credit unions, either individually or as elected Members, and from their perspectives on the value of credit unions to the economy and community. Deputy Hourigan said that finance is about society and she is absolutely right. The credit union plays a key role in that. I believe it was the Leas-Cheann Comhairle who said that a value could not be put on the credit union movement in Ireland. I echo those sentiments.

I have listened very carefully to Deputies throughout the three days of debate and I will take a few minutes to respond to some of the different issues that have been raised. I will address them in no particular order but rather in the way I have collated the different matters.

On collaboration and engagement with the sector, as Deputy Fitzmaurice has just said, this is very important. Deputy Harkin raised the question of the stakeholder round table. This has already begun. In fact, it is meeting at 3 p.m. As soon as I finish here, I will be putting on my runners to run down the road to get to that meeting. These meetings are held quarterly and happen regularly. I will be in attendance as often as possible. I have a particularly good excuse for not being there at the beginning today but that will not always be the case. In the two months I have been Minister of State, I have taken the opportunity to engage with the sector. This Bill is the product of that work and that really deep engagement with the credit union sector and the different representative groups. At every stage, every opportunity was given to the sector to put forward its views and proposals, which were all considered. Further amendments will be tabled on Committee Stage. Most will be technical in nature and designed to ensure that the proposals in the Bill, such as those relating to corporate credit unions, which I will come back to, and the ability to appoint a manager as a director, work as intended.

Many Deputies referenced the letter from the Irish League of Credit Unions, which saw a need for more amendments. We received that feedback last week. As recently as last week, we received a number of new amendments proposed by the sector to be considered. As always, we remain open at every stage to discussing such amendments and to seeing how and whether they improve the Bill or enhance the functionality of any part. We are completely open about that. Not every proposal is acceptable and not every proposal is going to work but it is important that they are talked through collaboratively to see what can be done.

As Deputies know, the Bill emanates from a review of the policy framework, an 18 month long review process carried out with all of the credit union stakeholders. That was completed in March 2022. The Leas-Cheann Comhairle asked about its publication. I have no difficulty in providing Deputies with an update on that, particularly before Committee Stage, or in meeting to discuss the details and outputs of the review in any way.

It was important that so many Deputies referenced the space that is created for citizens in communities right across Ireland, in rural Ireland but not uniquely in rural Ireland, where retail banks have moved out of the financial services landscape. Deputy Dillon, for example, referenced Bank of Ireland closing in Kiltimagh. I welcome that there is a strong credit union in Kiltimagh. Deputy Fitzmaurice referenced Glenamaddy. Deputy Shortall covered this in good detail. As Deputy Harkin said, if we did not have credit unions, we would look to invent them. The Deputy is absolutely right. Fortunately, we have the credit union movement. It is important to reflect on that as we consider the public banking space. As Deputy Ó Cathasaigh said, we need a public banking model. However, in many respects, I disagree with Deputy Shortall that we now need to go and create one. We need to give the credit unions every opportunity to work best first.

We are still a very small economy. We are small geographically. We need to have community banking, both geographically and locally, but also as an ethos. We have it actually in the credit union. We have the physical premises on the ground. We have the establishment of the ethos. We have the volunteers there. It has the finance to be able to do this. As a Government, we should be putting our efforts behind making that work as well as possible. As I said in my opening speech vis-à-visthe exponential growth of the fintech sector, we should be focusing our efforts on that. If, having reviewed that and having seen how that is working, there is more to be done, I am certainly open to that.

I come to the credit union movement new as a Minister of State. In my house growing up, my mother worked in a bank. Therefore, I opened a bank account, not a credit union account. That was merely an accident. However, my father was the first manager of the credit union in Tullamore. We are all connected to the credit union movement in many ways.

A number of Deputies spoke about the challenge many credit unions face in growing their lending. Linked to this was a perception about relaxing the capital requirements. Deputy Harkin referenced that here today. The capital requirements are there to protect the credit unions from unforeseen losses and to protect their members' savings. Under the Central Bank regulations, the minimum regulatory reserve to be maintained by all credit unions is 10%. That 10% reserve has to be set against the banks' requirement, which is 8.5%. In the round, it is not greatly higher than the bank requirement. I appreciate the point the Deputies are making but it is not that much higher.

Credit unions are generally well capitalised. They have a sector average of 16%. It is not as though everybody is at 11% and looking to try to change it. The sector is on average at 16%. I do not agree that it is as pressing a challenge as perhaps has been stated in the House. I would be looking at those credit unions that are closer to that and seeing where they are going and how they are getting on. It is not as pressing a challenge. It certainly is not as large a differential as might be the case with the banks. Obviously, the capital requirements do not impede or prevent the credit unions from lending.

Staying on the question of financial regulation and lending limits, the Central Bank lending regulations were reviewed, as Deputies will be aware, in 2019 following a full public consultation. Much extra flexibility was given to credit unions at that point. For example, as Deputies will be aware, those credit unions with assets of €40 million or less can only lend 7.5%, those with €40 million to €100 million of assets can lend 10% but those with over €100 million of assets, of which there are 67 in Ireland, can lend up to 15%, but they have to apply to the Central Bank to do so. However, only ten of the 67 have made that application. The additional flexibility has been there since 2019. Credit unions need time, I imagine, apart from anything else, to make this step to look for the higher lending limits, but it is already there. I would like to see more lending and more mortgages.

I acknowledge one of the issues that Deputy Troy raised regarding the requirement for a business plan for a loan, for example, for a van of €25,000. Indeed, the manager of Mullingar Credit Union raised that with me directly. Some time ago I raised that issue with the Central Bank as being one of too much interference. In the practicality of it, requiring a five-year business plan for a €25,000 loan for a van is excessive. However, it is this type of dialogue that we can have with stakeholder engagement, with the memorandum of understanding and with the enhanced engagement by the Central Bank. That seems like a practical problem that should be raised in that forum and that we can raise, and I would like to see more of that.

I would like to highlight the importance for the credit union sector of taking advantage of the opportunities that are provided in this Bill. The provisions in the Bill to refer members and for loan participation, to mention two examples, are important enablers for ensuring the sector can develop mortgages.

I also welcome Deputy Nash's proposal for reviewing the operation of the substantive parts of the Bill. It is something that I have raised with officials all along. If we give the credit unions the opportunity here to become more involved in the mortgage market and to work slightly differently to become that strong public or community banking force, and it is not taken, I am not sure that Ireland will have benefited. It is important to me to support the credit union sector but it is much more important to me that every citizen in Ireland has access to the type of banking and community banking services that we have all discussed here. It is important that we review and consider the operation of these parts. It is already the case that, as I said, the lending limits changed in 2019. Some of that opportunity was not taken.

Deputy Boyd Barrett and another Deputy yesterday raised the capacity to invest, for example, in approved housing bodies. That was permitted to be done up to €900 million for those regulated funds. To date only €13 million to €14 million - I stated yesterday "less than €20 million" - has been so invested. It is about taking the opportunities that are there. This Bill is an important further step in that regard and I would suggest that it is appropriate for this House to have an opportunity to consider how that works. Other things I suggest might be considered over time include the ministerial role in setting lending rates. Let us get this bit right and reflect on it as we go.

I would also like to respond to the questions that Deputies Mattie McGrath, Connolly and others raised in relation to corporate credit unions. The word "corporate" is only the word that was picked. It could be anything. It could be "collaborative". It is not really about corporatising credit unions. As Deputy Harkin said, it is simply a credit union whose members are other credit unions. That is basically it. You could call it anything. It is a corporate credit union whose members are the other credit unions. It is owned by the credit unions and its point is to be a collaborative vehicle to set up more collaboration in this sector.

We already have similar vehicles using slightly different legal structures, but they are the same. For example, Cultivate, which Deputy Ó Cathasaigh referenced, is a collaboration of credit unions that come together to provide agri-loans. The corporate credit union movement - I am happy to change the name if people do not like it but that is the point - is simply a collaborative venture so that you pool resources and access mortgage and other products, perhaps slightly differently.

So many Deputies talked about balance. There are many credit unions. For example, I met a group of credit unions in Tipperary, as Deputy Mattie McGrath, had referenced. One of them does not want to change and would like to stay in the space it is in. It is small and community driven. That is absolutely fine. Others would like to get rid of the common bond entirely and move in a completely different direction. What the Government is trying to do, what I am trying to do and what I hope this House is doing, and I have heard this call for balance again, is to reflect the wishes of both and to provide the opportunity for both to thrive, to retain the volunteer community-driven focus but also enable the professionalisation and growth for those who want to operate in a different way and at a different level. Those things do not step across each other in any way. Both are possible. What is important is that if you come in as a member, you have referral pathways to other credit unions and you are not limited or prejudiced by where you live and the common bond you are in because of the services your credit union happens or chooses to provide. This was described by Deputy Shortall as a postcode lottery. The referral pathways are important from the perspective of the citizen. They also enable credit unions to take different perspectives on what they wish to do. It is their members that drive that, and that is so important.

Indeed, this Bill is proactively protecting the volunteer ethos of credit unions. To that end, the Bill includes an acknowledgement and a recognition of the role of the sector in developing a volunteer-led co-operative movement. In other circumstances, I would say that is not the sort of thing that you put in legislation. That is a bit extra, but it recognises the importance of the credit union movement.

I recognise what Deputy Nash said. Stakeholder banking is what this is. Every credit union member, I believe, should be able to open a credit union current account and should be able to access a mortgage product. That is not happening at present and I would like to see that happening.

Credit unions give members, as Deputies Gould and Moynihan referenced, the ability to avoid moneylenders and they provide for death grants. That gives people dignity, peace of mind, respect, face-to-face inclusion and, as Deputy Hourigan mentioned, financial inclusion. They need to be protected. Protecting that balance is important, as is keeping the community focus that is at the heart of the credit union ethos.

As Deputy Bruton described yesterday, we have to be ambitious for the sector. As Deputy Higgins said, we have to be ambitious about productively using the assets that credit unions have. They have €20 billion of assets and they are only lending €5.5 billion and to my mind they should be lending at least double that. They should be lending that money for retrofits and using it more productively for their communities, as Deputy Ó Cathasaigh said. They should use those assets productively yet prudently and this Bill can strengthen that.

My general view of the Credit Union Act 1997 is that it is a strong one. It is a rather old Act and if Deputies, in coming to Committee Stage, were minded to look at what might be regarded as some of the more patriarchal language that has survived over the years, I am open to have a look at that also and at bringing it up to the best possible standard we can achieve together. I commend the Bill to the House.

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