Joan Burton (Dublin West, Labour)
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55. To ask the Minister for Arts, Heritage and the Gaeltacht the progress of the investigation of the establishment of a public banking system here by her department; the likely timeframe of the investigation; the stakeholders involved; the way in which interested parties can make a submission to the investigation; and if she will make a statement on the matter. [4074/17]

Willie Penrose (Longford-Westmeath, Labour)
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62. To ask the Minister for Arts, Heritage and the Gaeltacht the progress of the investigation of the establishment of a public banking system here by her department; the likely timeframe of the investigation; the stakeholders involved; the way in which interested parties can make a submission to the investigation; and if she will make a statement on the matter. [4244/17]

Joan Burton (Dublin West, Labour)
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Where are the proposals for a Sparkassen type banking system? When will a pilot of local banking for rural Ireland be introduced in counties Longford, Westmeath, Offaly and Laois based on the German Sparkassen model? I am disappointed that almost no progress has been made on this project and that it was not specifically included in the rural action plan, apart from a nod towards examining the issue again.

Michael Ring (Mayo, Fine Gael)
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I propose to take Questions Nos. 55 and 62 together.

A Programme for a Partnership Government envisages that An Post, the League of Credit Unions and other interested stakeholders will be asked to investigate and propose a new model of community banking, such as the Kiwibank model in New Zealand, which could be delivered through the post office network. The programme for Government also includes a commitment to investigate the German Sparkassen model for the development of local public banks that operate within well defined regions. The role of my Department in this matter will be to work with other Departments and stakeholders to examine the feasibility of these and potentially other models.

Senior officials from my Department have met their counterparts in the Department of Finance and are developing a work programme to examine the potential of the Sparkassen model and other models of local public banking, as referenced in A Programme for a Partnership Government. It is anticipated that this work will be concluded by the middle of the year. It is envisaged that a consultation exercise with relevant stakeholders will be undertaken as part of the work programme. These stakeholders will include, for example, the Irish League of Credit Unions and other parties with a particular interest in the community banking model.

My Department has already received a submission from Irish Rural Link on the Sparkassen banking model and this is being considered by my Department as part of the work programme with the Department of Finance. Other parties interested in making a submission can write to my Department at any stage. While my Department is facilitating the process of progressing the commitment in the programme for Government on this particular matter, wider policy responsibility for public banking falls under the remit of the Department of Finance.

Joan Burton (Dublin West, Labour)
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In earlier exchanges, we heard about the imbalance in development between the east coast and the broad Dublin region, which nowadays extends from Dundalk to Wexford and as far west as south County Kildare. Since the Second World War, a model of local banking used in rural areas and small towns in Germany has provided small and medium enterprises with basic access to capital. Sparkassen has done considerable work in Ireland and recently held a seminar in the RDS explaining the model and the assistance they were prepared to provide. The Minister for Finance, Deputy Michael Noonan, is a friend of the German finance Minister, Mr. Wolfgang Schäuble, who is in favour of the Sparkassen model. We are being offered assistance in respect of a type of banking that is not available here. We just spoke about the demise of post offices and difficulties with a number of credit unions. Why not use this golden opportunity to create a financial structure that would service rural areas, particularly small and medium enterprises?

Willie Penrose (Longford-Westmeath, Labour)
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It is clear the economic recovery has been unbalanced. While the greater Dublin region and multinational export sector have been experiencing growth, the recovery in the Border, midlands and west, BMW, region is undermined when agricultural enterprises and other small and medium enterprises lose access to the financial system. Will a pilot scheme for the Sparkassen model be introduced? County Westmeath, which I represent, is ready, willing and committed to adopt a pilot scheme for the BMW region. Is it not the case that with the demise of building societies and the withdrawal of bank branches across the country, human intelligence and knowledge of business in the BMW region have been replaced with algorithms and remote banking, which have no interest or stake in the community?

We are facing the challenge of Brexit. Action 23 of the rural action plan refers to investigating the potential of the German Sparkassen model. If that is the case, why have Sparkassen or Kiwibanks not been included as a responsible body in the plan? The Departments of Arts, Heritage, Regional, Rural and Gaeltacht Affairs and Finance, An Post and the Irish League of Credit Unions are involved. Surely the rural action plan presented an ideal opportunity to have these banks included in the overall responsible body.

Peadar Tóibín (Meath West, Sinn Fein)
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Credit is crucial as it is the lifeblood of rural enterprise.

We have had this huge problem with regard to credit in rural areas for many years. The commercial banks have been retreating from rural areas, purposely to retain their businesses in the large towns. They have been facilitated in doing this through the Government's creation of two pillar banks. Some 90% of business is done with the two pillar banks. The Government created an oligopoly whereby the banks can determine the level of service, the price of service and the location of service. We have huge opportunities with regard to the post offices, the credit unions and the public banking system, orSparkassen, but the Government has not acted on this in any way.

I have spoken to senior people within the regulation space in the credit unions in this country and they have said that the reason they are not given extra banking powers is because the Government does not believe in its ability to govern that extra strength. If that space does not exist, the logic is that the Government would create the supports necessary for the credit unions to fulfil it. The Sparkassen has massive space, about 40%, of this sector in Germany. It is illogical why it is not being used here.

Michael Ring (Mayo, Fine Gael)
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There is an action in the plan to support credit unions. To be fair, credit unions have done an excellent job down through the years. I am a supporter of the credit union movement.

Peadar Tóibín (Meath West, Sinn Fein)
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Not in action.

Michael Ring (Mayo, Fine Gael)
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There is support for them. There will be engagement with them the context of this plan. The Sparkassen model and post office models will also be examined.

In regard to a point raised earlier, 72% of all jobs created in 2016 were created outside Dublin. There are many people in this country who are creating thousands of jobs throughout the country who are forgotten about in the context of the jobs being created by large companies such as Google and so on. They should be thanked and complimented for the work they are doing. In my own town, the Hughes family who create many thousands of jobs, recently purchased Westport House, thereby securing its future. I welcome that.

Willie Penrose (Longford-Westmeath, Labour)
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I saw a lovely picture recently of the Minister of State outside Westport Hotel.

Joan Burton (Dublin West, Labour)
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The Minister of State, Deputy Ring, is in a very important position to take a leadership role in terms of completing the talking and starting the action. We know the post offices are in difficulty, notwithstanding huge efforts which I made when Minister for Social Protection to ensure that they retained a large slice of business via the Department of Social Protection. We know that the credit union model needs to make changes to become a more viable people-local community banking service, including in regard to the provision of basic bank accounts. We know also that the Department of Finance, be it the Minister or the senior officials, is cold on the idea of local community based banking, yet the Taoiseach's favourite model is the viable local banking structure, Sparkassen, which operates throughout villages and towns in rural regions of Germany. I call on the Minister of State to grasp the opportunity to give leadership on this issue.

Willie Penrose (Longford-Westmeath, Labour)
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It is not the case that a public banking system would be not-for-profit or be restricted to lending to the regional economy for its business. Post offices and credit unions could earn additional income from the sale of public banking services across the counter via their branches. Is it not the case that the public banking system would be a more suitable place for the credit union movement to invest the €9 billion which it has identified it wishes to lend to SMEs and, through another medium, provide them with much needed administrative support to meet the ever-burdensome Central Bank regulation system?

My colleague, Deputy Burton, referred to the Department of Finance being cold to the credit union movement. The attitude of the Department is below freezing when it comes to anything to do with the public banking system model. It has no interest in it. It is the best I have ever seen at putting on a facade. One would need a rock shifter to get the Department to adopt this system. If this can be done in Germany, it can be done in Ireland. It needs to be done in Ireland.

Michael Ring (Mayo, Fine Gael)
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In response to Deputies Burton and Penrose, I am taking this matter seriously. I am dealing with the post offices. Officials from Germany will be in Ireland on 13 February to meet with my officials. I have met Irish Rural Link and I will meet with the credit union movement and all the other stakeholders involved. In regard to the Department of Finance, I know from experience, in terms of having to engage with officials in relation to funding, just how cold its reception can be.

Willie Penrose (Longford-Westmeath, Labour)
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One could get frostbite.

Michael Ring (Mayo, Fine Gael)
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I am not the greatest supporter of banks. We all know what the banks did to this country. We know also what the country had to do for the banks. We have to be careful about how we deal with this issue. We need to be sure that this model will work. We do not want to use models that in the future the State will have to subsidise or takeover if difficulties arise. When we do this, we must do it right. I can assure Deputies Burton and Penrose that I will do all I can in regard to this matter, in respect of which I will certainly have to warm up the Department of Finance. I will do my best and I might need the Deputies' support along the way.

Willie Penrose (Longford-Westmeath, Labour)
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The Minister of State is the right man for the job.