Rose Conway Walsh (Sinn Fein) | Oireachtas source

I welcome the Minister of State to the Seanad to discuss the report on the credit union movement. I welcome the publication of the report and the significant amendments that were submitted by various parties.

As did other speakers, I commend the work of all of the volunteers and people connected to credit unions, and certainly to all of the credit unions I know, which form the very heart of many communities. At a time when bank branches are closing and being centralised and digitised, the credit union is becoming even more important in all of our communities. This is evident throughout the life-cycle, whether it be a student applying for a loan or an elderly person applying for bridging finance while waiting for a housing aid for older people grant where the person has been refused by the banks. We all agree that credit unions are hugely important and becoming ever more important in our communities.

The major problem is the disconnect between the Government's rhetoric and actual action on the credit union sector. In October 2011, a statement was made in the Seanad that there was a potential black hole of €1 billion in the credit union sector. That prediction has since proved to be entirely inaccurate. It was indicative of the attitude of the State and the Government to the credit union sector at the time.

Credit unions continue to serve communities all over Ireland with member-focused products. The report highlights the negative impact the low loan to asset ratios have on credit unions. The section 35 limitations need to be reviewed. This has been called for by the report and by the advisory committee. When will that review start and when will the Minister of State report? These limits are impacting on the ability of credit unions to lend money to their members.

The promise of tiered regulation must be acted upon immediately. Tiered regulation was meant to be about the proportionate application of regulations, taking into account the individuality and diversity of credit unions. Instead we see blanket regulation imposed by the Central Bank regardless of size. This reflects the poor relationship between the Central Bank and credit unions. There should be a third party that could hear appeals against the Central Bank's system, which could also facilitate a form of reconciliation between the two.

There should be movement to empower credit unions to invest in the housing crisis. It is unacceptable that seven years in, the Government has made no movement on this. My party has made very detailed submissions explaining exactly how this could be done. It could be facilitated by the creation of a specific fund, from which tier 3 approved housing bodies could apply on a rolling basis for loan assistance for the purchase, renovation or building of social housing. Funding could be approved on a 100% or perhaps a 70% basis, with the Department of Finance providing 30% of the funding through the already established approved housing body funding mechanisms. Loans could be repaid via a 30-year availability agreement between the approved housing body and the local authority housing department. The agreement would cover the repayment of the loan and a small premium to cover management and maintenance costs. In the case of larger approved housing bodies, if the appropriate finance was made available, an additional 2,000 to 4,000 social housing units could be built.

Sinn Féin supports the proposal made by the Irish League of Credit Unions to allow for the provision of €347 million annually in approved housing body loans, to be built up incrementally to €1 billion over six years. The composition of the fund in terms of governance and board membership could be decided following discussions between the Central Bank, the Department of Housing, Planning and Local Government, the Irish Council for Social Housing, the credit unions and the approved housing body sector. I cannot understand why the Government has not yet looked seriously at this proposal.

The report also states the regulatory reserve ratio is a crude instrument that does nothing to take account of the risks faced by credit unions. The Credit Union and Co-operation with Overseas Regulators Act 2012 states the Central Bank shall have regard to the need to ensure that requirements imposed by the regulations and made by it are effective and proportionate, having regard to the nature, scale and complexity of credit unions or the category or categories of credit unions to which the regulations will apply.

Overall the report highlights the role that credit unions have played over 70 years, especially during the most recent financial crisis. There are many people who would not have had any access to credit only for their local credit union. The report does highlight some problems facing the sector, but the biggest problem is still the State. There will always be a need for regulation, but this should reflect the unique circumstances of the credit union movement. This has been promised for many years and I want to hear from the Minister of State today what concrete plans the Government has to bring this about urgently and make it a priority.