Joe O'Toole (Independent)

I wish to share my time with Senator Ross.

I welcome the Minister of State and his officials to the House. While this is important legislation, I must say I find it very depressing and discouraging. I do not blame the Minister of State for that. It is clear that market forces are at work and this is inevitable. The Minister of State had no choice but to move forward and deal with the issues being dealt with in this Bill. I wish it were not so. I am committed to the concept of mutual societies and I regret their demise but the fact is this is happening. The Minister does not have any control over that and neither does the Government or anybody else. That is the way the market is moving and the way we must follow in this respect.

However, it is important to recognise what is involved when we talk about, to use the word used by the Minister of State, "conversion" or demutualisation. In a mutual society, the society and its assets are owned by the members. These are the members who have a loan from the society. Following the conversion to a public limited company, the company is then owned by the shareholders. The shareholders must get their dividend and profit. They get that by squeezing the mortgagees. In other words, they must put pressure on the people who are repaying their mortgages not only to run the company but to create a profit for the shareholders. Therefore, there is an extra tier of costs which is loaded on to the process and which must be paid for by the mortgage holder. That means we are moving away from the concept of people looking after each other in the buying of houses. It is one further step to make life more difficult for people who are trying to cope with paying for the cost of buying a house. In that sense, it is tragic.

I listened recently to comments by the Educational Building Society on this proposal. They were that the society was delighted about this legislation and that it would give it added protection. I have read through the Bill and do not see where there is any such added protection in it. Nothing has changed. I agree with the Minister of State that there might have been some doubt about what was meant in the original Bill and he was right to change the legislation in the way he has. It was never the position that people could walk into the AGM of a building society and bring a motion that the society would be demutualised and get it passed.

People should recognise that there is no added support for mutualisation in this legislation. It does not make life any worse for those societies who wish to remain as mutuals and that is a good thing. Neither does it in any way make it less likely that they will demutualise. That is the case.

I have a particular interest in building societies because the Educational Building Society was founded by members of my union in the Teachers Club 70 years ago in the hungry 1930s. That is where the society got the name Educational Building Society. Therefore, I have always had a keen interest in it and closely followed its progress. I have admired the way it managed its business and the way it is trying to maintain mutuality, but I do not believe that it will succeed. Market forces will overwhelm building societies eventually and they will move in that direction.

I am not trying to draw in another strand to this debate but, as Senator Kitt said, this change will mean that the largest mutual service that will remain in the financial services area will be the credit unions. Significantly, the Irish League of Credit Unions was also founded by a member of my union, Ms Nora Herlihy. People involved in education have always been considering how we fund the buying and selling of houses.

If the largest mutual group remaining after the enactment of this legislation is credit unions, we need to examine that matter. I would like the Minister of State to give a commitment to come back to this House in the autumn and discuss some of the issues related to mutualisation and to allow credit unions to give bigger loans to people who wish to buy a house. Senator Kitt raised a related issue. There is merit in the issue he raised, but I do not fully agree with it because there are number of other issues involved. If we move into that area, we will have to ensure that credit unions are not used for money laundering purposes, are properly run and their debt properly managed. As Senator Kitt said, credit unions are investing in financial institutions. I am concerned that we have not put down a sufficient marker on how such funds are being invested in financial institutions. Taking all those aspects into account, credit unions will have a more important place in society than they have had previously and they will take the place of mutual building societies in the future. We should proceed carefully down that road. Today is one step. I am disappointed this legislation is before us. I wish we did not need to have it, but I recognise the Minister of State's need to do so. I will support it on that basis.