John Paul Phelan (Fine Gael)

In light of the engagement the Minister, Deputy Brian Lenihan, has accepted for August, he might be coming over to this side. I wish to make a couple of points on the Bill, although I do not want to repeat everything that has been said on the financial disaster which the country finds itself in currently, especially our difficulties in banking and bank regulation. I echo the comments of Senator Norris on the recent banking reports which clearly outline that although there was an international dimension to our difficulties, quite a significant proportion of our problems were home grown. I do not blame the Minister for this and I quite clearly state that he was deliberately kept down politically in the Government for a long time while others were in charge. Other people made the calls on economic matters and more is the pity that he was not in his current position much sooner. Many people in the country would agree with that point.

I wish to raise my concerns on the credit union issue as well and ask the Minister, in his concluding remarks, to clarify one of the eight measures which he pointed out would be introduced following discussions in the other House. He referred to a specific statement introduced in section 35(2C) meaning that the Central Bank may give notice to credit unions with regard to lending requirements only where it considers it necessary for the adequate protection of member savings. Will the Minister clarify that statement? I may have missed other points but that goes to the central argument that many people in the credit union movement have with some of the recommendations in this legislation.

As Senator O'Reilly has pointed out, the credit union movement has been a shining light in many isolated parts of the country in getting access to credit for ordinary citizens over the years. Crucially, people have been able to get access to credit other than from the moneylender, which is a creature that is reappearing in different parts of the country. The credit unions deserve much recognition for combating this problem.

I welcome the appointment of Mr. Elderfield as the regulator, as he is doing what is basically a good job. Most the people involved in the implementation of regulation prior to our banking collapse are still there, although we may have changed some of the top people involved. Most of the rest of the structure remains and even with this realignment, as proposed in this piece of legislation, of the regulation function, these people will still be in the relevant positions.

There is a lack of confidence on behalf of the credit union movement in the people who have been regulating it, and there is certainly a lack of confidence among the public. That is the great strength of the credit union movement, which represents the public. The Government cannot have it both ways with regard to the credit union movement. The central plank of the changes in this legislation for the credit unions as I understand it would be to introduce binding regulations, as opposed to the current guidelines, with regard to lending practices for credit unions. The Government cannot on the one hand accept and endorse the co-operative movement under which the credit union leagues operate while on the other hand removing the autonomy they have to perform their functions. The one-size-fits-all approach will not work for the credit union movement and there is a danger that this piece of legislation will make them more like the banks, which we should be trying to avoid at this juncture.

The credit unions have a unique and different function which has been fulfilled very well over the years. As other Senators have pointed out, no credit union in the country has been forced out of business recently and credit unions have not come to the Government looking to cash in bonds. There should be cognisance of that. Reforms are necessary in the credit union movement and although many of the larger credit unions are adopting bank-type lending policies, they do not have the necessary equivalent funding-type policies. We should ensure credit unions do not engage in long-term investments unless they have the same long-term funding to back up those investments. There is a potential for difficulty unless some action is taken in that regard.

That is about all I wanted to say on the legislation. I have no difficulty with much of it but I would be interested in the Minister's clarifications of earlier comments regarding the autonomy that credit unions will have after this legislation is enacted if there is no amendment dealing with lending policies into the future.