Martin Mansergh (Fianna Fail)

I welcome the Minister of State to the House. I also welcome the discussion afforded by this Bill. As I noted last Wednesday, I thoroughly approve of the introduction by Members, be they Government, Opposition or Independent, of legislation or Private Members' Bills. Such legislation can stimulate discussion and the deliberative process and can give a push towards a destination. On that basis, I congratulate Senator O'Toole on introducing this detailed Bill.

All Members recognise the invaluable social role played by credit unions in Ireland and I welcome the expanded limits that have been agreed with the Government that improve the credit unions' lending capacity. The importance of credit unions, particularly in small or medium-sized towns, has been pointed out. It is worth noting that their role was discussed in some detail by the Oireachtas Joint Committee on Finance and the Public Service, of which both Senator O'Toole and I are members. The joint committee had the opportunity to listen to representatives of the credit unions.

It is a proud achievement that, to date, no member of a credit union has experienced loss of their shares or deposits and no credit union has become insolvent. However, particularly given the current high propensity to borrow, this is not to say there are no future dangers that must be guarded against and it is questionable whether there is sufficient protection in this regard. This is generally recognised, as is the need to improve the safety net provided by the savings protection scheme, which is really a stabilisation fund rather than a guarantee of individual savings.

However, the mechanism for so doing is open to question. A detailed consultative process involving the credit unions and the Department of Finance is under way. As the Minister of State has pointed out, the ongoing discussions are making progress in this regard. Consequently, it is open to doubt whether, in a literal sense, a parallel initiative such as this is apropos, especially one that does not command the complete consensus of the credit union movement. Although the Minister of State has outlined the reasons the Government side cannot support the Bill, this does not detract from the value of its introduction for discussion by Senator O'Toole.

Since there may not be a Committee Stage debate on this Bill, it might be worth making one of two points of detail on the Bill. Section 5(2) proposes to give the regulator ultimate power to change the memorandum and articles of association of the new company. However, there is no mention of any consultation process with credit unions or the wider movement. Section 6 mentions expenses that could be taken out of each credit union's contribution by the company. However, it could be argued that each member's contribution to the company should be ring-fenced and held as a liability due back to each credit union.

Section 8 proposes to give the company the power to invest according to the rules set down by its board. Arguably however, it should be subject to the same guidelines as laid down in the regulator's investment guidelines for credit unions. Section 10 states that the new company should be exempt from capital gains tax. However, as credit unions are subject to capital gains tax on gains made on the sale of investments, there may be some inconsistency in this regard. Moreover, there is no mention of value added tax in respect of the new company.

Section 12 deals with the appointment of directors. Arguably, individual credit unions, the Irish League of Credit Unions and the wider movement should be entitled to nominate suitable candidates for the position of director in the new company. In respect of section 12, I am surprised by Senator O'Toole's exclusion of members of local authorities. Perhaps it is because as an Independent Member, he does not face the same electorate as those who are elected on the panels. This is a sore point with most Members and was not covered in his speech. I do not understand the rationale. If someone is properly qualified and may be involved——