Michael Mullins (Fine Gael) | Oireachtas source

I welcome the Minister of State, Deputy Sherlock, to the House and compliment him on the excellent job he is doing in his capacity as Minister of State with responsibility for innovation and technology.

I very much welcome the introduction of the Friendly Societies and Industrial and Provident Societies (Miscellaneous Provisions) Bill 2013. It honours a commitment made in the programme for Government to work to promote a greater appreciation of the co-operative model as a form of business organisation and to ensure a level playing field between co-operatives and the other legal options for structuring enterprise activities. In the Action Plan for Jobs 2013 the Government promised to publish legislation aimed at easing the regulatory burden on co-operative societies and making it easier to run a co-operative as an alternative form of enterprise organisation.

The purpose of the Bill is to provide for various amendments to two codes of legislation, namely, the Friendly Societies Acts and the Industrial and Provident Societies Acts. The main amendment in the area of friendly societies provides for the closure of registration of new societies. The amendments in the area of industrial and provident societies are aimed at easing the regulatory burden on co-operative societies and making examinership, currently available only to companies, accessible to co-operative societies.
Friendly societies developed as part of the mutual self-help movement in the 19th century. Things have moved on since then and very significant developments have taken place in our country. The State intervened with the introduction of social welfare payments, coupled with the growth and development of the insurance business as an industry sector, which saw the social purposes served by the friendly societies begin to decline somewhat. There are currently some 35 friendly societies, six of which have been in operation for more than 100 years, many at relatively low levels of activity. The five largest societies, both in terms of assets and annual income, hold assets of more than €150 million and their volume of business in 2011-12 was approximately €70 million. Four of these societies have a predominantly public sector membership, two offering what might generally be termed health insurance - the Garda and Prison Officers Medical Aid Societies, both registered with the Health Insurance Authority as restricted membership undertakings. The fifth is the last remaining active specially authorised loan society, a society which is authorised to grant loans to members. In all, 16 societies hold assets in excess of €1 million. There are only six societies currently on the register which have registered since 2000, none of which is involved in the provision of financial services.

The Bill provides for the closure of registration of new societies under the Friendly Societies Act. Only a small number of societies remain in existence and there have been only three new entrants in the past nine years, which indicates there has been a decline in the number of people interested in the future of the friendly societies.

Turning to the Industrial and Provident Societies Acts and the co-operative movement, a co-operative is an association or body which is organised and operates on the basis of a co-operative principle, that of democratic member control - one person, one vote. The co-operative movement has made a very significant contribution to Irish life. The dairy sector is the most significant and the better known.

That developed from the days in which we had many creameries at many crossroads across the country. We now have large organisations which use the legal forms of the industrial and providence societies as well as company law, such as Kerry Group, Glanbia and Dairygold. Another example of well known co-operatives which have played a significant role in our country are the livestock marts. Approximately 26 livestock marts operate throughout the country, with 40,000 members and over 800 employees. The farm relief services network is another significant co-operative endeavour, with approximately 20 co-operatives providing farm services such as milking, fencing and health and safety training. Fishing co-operatives have also been established in various parts of the country, with 55 such co-operatives in operation in 2005. Housing co-operatives play a significant role in the provision of group housing and affordable housing to people with modest incomes through a mix of renting and ownership. The single biggest group on the register at the end of 2012 comprised group water scheme societies. There are 345 such societies, accounting for over one third of all co-operatives registered.

Worker co-operatives are in their infancy in Ireland but they are viewed by some as a highly effective form of business organisation, given the personal incentives they create for increasing productivity. This is an area we should develop further. Prior to 2002, a co-operative service was provided by FÁS. The co-operative structure is regarded by some as an ideal structure for succession planning, particularly in respect of small and medium-sized enterprises and family-owned companies. It also has potential for creating spin-off enterprises from larger companies. The co-operative movement in Ireland and across Europe and the United States has made a significant contribution to economic prosperity. Banking co-operatives have approximately 20% of the market share across Europe. In the United States, approximately 21,000 co-operatives serve 130 million members.

This Bill would extend the existing law on examinership, which currently applies only to companies, to industrial and provident societies. The aim is that the 1990 Companies (Amendment) Act, which introduced the examinership mechanism for companies, will also apply to industrial and provident societies. Provision is also being made to remove the upper limit on the interest in a society an individual member may hold, which is currently €150,000, or 1% of the total assets of the society. This will allow individual societies to amend their rules to set a higher limit, or no limit, should they wish to do so. Significantly, the Bill provides that an appeal of a decision by the registrar may be made to the Circuit Court rather than the High Court. This should have a significant impact in terms of reducing costs. The ministerial role in the cancellation of an industrial and provident society is being removed and responsibility for cancellation will now rest solely with the Registrar of Friendly Societies.

This is a worthy Bill which aims to level the playing field and make it easier for co-operatives to do business and, hopefully, to expand and develop. There is considerable potential to harness the co-operative movement to grow and develop businesses. Co-operatives are now being established in the areas of health provision and home care, and other aspects of Irish life. I have great pleasure in supporting this legislation because it will have a positive impact on business in this country.