Paul Bradford (Renua Ireland) | Oireachtas source

I thank the Cathaoirleach for allowing me the opportunity to raise this important matter in Seanad Éireann. I welcome the Minister of State, Deputy Tom Hayes, who I trust is representing the Minister for Finance, Deputy Noonan. I ask him to pass on to the Minister my concerns about this matter as it relates to credit unions.

The Minister of State comes from the constituency of Tipperary South and I am sure he is aware of the tremendous work being done by his local credit union in Cashel and others in towns throughout the area. I am aware of the Mallow, Fermoy and Mitchelstown credit unions, among others, which have been at the core of the development, sustaining and maintenance of towns and communities.

We have to be careful about the way new regulations or laws will impact on the credit union movement. My question to the Minister of State and the Minister for Finance is, if the Central Bank fully understands the ethos of the credit union movement, does it fully support our credit union movement or, as some people would surmise, does it wish to restrict credit union expansion and see credit union amalgamations? Does the Central Bank wish to impose further restrictions on our credit unions?

If, at the end of the year, the Minister for Finance signs the commencement orders to which I refer, it will have a very serious impact on the credit union movement throughout this country. Personal loans would be restricted to a significant degree from a time limit perspective, and there would be a personal guarantee type requirement on many car loans and house improvement loans, and the credit union movement has been at the very core of that type of lending.

Is the Minister aware that if a person was fortunate enough to have sufficient funds to have a deposit of more than €100,000 in a credit union, that deposit would have to be reduced to a maximum of €100,000? If he or I won €1 million in the lotto in the morning, we would not be entitled or able to put that money in the credit union if these commencement orders are signed because there would be a maximum deposit limit of €100,000. There would be further stringent liquidity requirements placed on credit unions. The credit unions' ability to respond, act and generate economic activity in their local communities will be profoundly hampered.

Currently, from a national perspective, I am told there is €8 billion on deposit in credit unions which is not generating income. Part of the reason for that may be because there was not a demand for this money during the recession. However, because of the restrictions on the lending of that money, it is on deposit but not being put to use.The credit union movement, through the Irish League of Credit Unions, has suggested that this money could play a role in the development of social and community housing and has made proposals to the Government in that regard. However, the money is restricted in its use, and that is a matter of concern. The new commencement order, if required, will further restrict the use of that money. If that €8 billion was being used in today's economy, with a conservative multiplier effect of four, it would amount to the stimulation of €30 billion worth of economic activity. That sum of €30 billion could be used to support social and voluntary housing as well as small enterprises and industries. Today in Brussels the European Commission will publish a paper on the concept of alternative forms of lending and financial support for small and medium-sized industry, while here at home we have a credit union movement with €8 billion on deposit, the use of which is restricted.

I would ask the Minister of State to recognise that this is a genuine crisis as far as the credit union movement is concerned. The representative body, the Irish League of Credit Unions, has sought a meeting with the Minister for Finance on this issue. While I fully appreciate that the Minister is, by some distance, the busiest man in the entire apparatus of Government, I ask that the Minister of State, Deputy Tom Hayes, ask him to meet face to face with the credit unions to discuss the options. They have been seeking a meeting for some time and, while they have received acknowledgements from the Department, no meeting has yet been facilitated. I believe the Minister of State at the Department of Finance, Deputy Simon Harris, may have met the Irish League of Credit Unions some months ago, but a meeting with the Minister himself is needed urgently, before the year is out.

We need to support and strengthen the credit unions. I am concerned that there could be a view that we should slim down the credit unions, with money then being transferred into the banks. When credit union deposits are restricted it is good news for the banks but bad news for the credit union movement. The Minister of State and I know of thousands of families across the country whose financial existence has depended on the intervention, common sense and practicality of the local credit union. Of the moneys provided for bad debts in the credit union system, very little was actually required. The vast majority of credit union loans are fully repaid, which proves that their lending policies have always been wise and locally managed. It is a model that has succeeded, and the credit union movement is seriously concerned that the proposal to commence this legislation will have a negative impact on the movement and on community life in general.