Gerry Horkan (Fianna Fail) | Oireachtas source

I welcome the Minister of State and thank him for his attendance and his opening statement. We will all be singing from the same hymn sheet where many of his comments are concerned. Fianna Fáil welcomes the report, having pushed for its publication, and everyone shares the view that credit unions are a vital part of communities across Ireland. There is a connection to a credit union in every small and large town and parish.

It is fair to say that there has been a great deal of change and consolidation in the sector. In the past month or so, I attended the 50th anniversary celebration of the Stillorgan credit union, which recently merged with the Donnybrook credit union to become the South Dublin Credit Union. They were both celebrating 50 years. It was a great evening.It shows how far they have come and how well they have done in the context of everything that happened in the banking and finance sector. Many credit unions probably had money on deposit in places such as Anglo Irish Bank. If it had been let fail totally, the credit union movement could have suffered. The larger banks could have learned from its performance and prudence and how it had behaved during the crisis. It important that I acknowledge and include the fact that the confidence and supply agreement states a strategy for the growth and development of the credit union sector needs to be established. That was stitched in by Fianna Fáil in its discussions with Fine Gael on the formation of the Government.

It is also important to point out that credit unions have about €8 billion of what they identify as surplus funds. These are funds available to invest in small and medium enterprises, SMEs and some of them - this gives hope to a lot of people - could be put into affordable housing projects. I refer to those that would be sustainable, provide a return for credit unions and equally provide valuable social and affordable housing. The Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach - almost of all us of here, certainly me as Vice Chairman to Deputy John McGuinness, Senators Rose Conway-Walsh and Kieran O'Donnell and the Minister of State, Deputy Michael D'Arcy, until his recent promotion, were members of the committee - deemed it to be the right time, after the financial crisis, to look at the status of credit unions. I refer to how they had weathered the storm and reviewing the impact of the measures put in place.

We need urgent action by the Government, the Department and the Central Bank. We also need tiered regulation, to which the Minister of State referred. We need the Government to show some leadership on the social and affordable housing model. I understand the Department is a reluctant to do so and perhaps it is fair to say it is reluctant to do anything that would damage the pillar banks. That is possibly because it has shareholdings in them but equally because it is trying to make sure they will survive. Amidst a housing crisis, however, it is incredible that the Government seems to be allowing this opportunity to slide through its hands.

The Minister of State has outlined much of what is in contained in the report. It is important, however, to outline some of the main recommendations, including the need for a timely review of the framework and regulatory requirement that tiered regulation be implemented. At the celebration of the Stillorgan and Donnybrook Credit Union, now South Dublin Credit Union, proportionate regulation was a topic of discussion - that the same standards did not necessarily have to apply to the smallest as to the largest and that the regulations applied sometimes were a little excessive and onerous. We have to remember that many of the people involved in the credit union movement are volunteers. They are doing it on a part-time basis and do a very professional job, but it is not all they are doing. It important to allow the sector to have proportionate balanced regulation that would not make it difficult for it to operate. I am not for one second advocating light touch regulation, to use that famous phase. There is a balance to be struck. Most of the people involved with the credit union movement get the point I am making and I am sure the Minister of State does also.

Another recommendation made after the publication of the report in 2016 was that the implementation group meet regularly to oversee implementation of the seven key recommendations. In identifying potential investment streams to enable the credit union movement to diversify serious consideration should be given to allowing the credit union movement to utilise assets in approved housing bodies and in the process alleviate the housing crisis. Where applications were being made by the credit union sector concerning new business proposals, it was recommended that the Department and the registrar provide clear and explicit feedback on the merits of the applications and, crucially, identify enhancements that would support them. It was also recommended that greater emphasis be placed on the important role of the credit union sector in ensuring the financial inclusion of citizens.

I will mention a couple of points that the Irish League of Credit Unions, ILCU, communicated to all of us. It is important that they be included in the debate. They are people who are on the front line every day, experiencing the operation of the credit union movement, of which many of us are members. The ILCU emphasises the legislative framework and the regulatory requirement for tiered regulation to ensure a proportionate application of the regulations. I refer also to the CUAC recommendation for a full review of section 35 lending and concentration limits. It will allow credit unions to develop and grow beyond the current permitted limits and is endorsed by the committee. It was also pointed out that a new appeals mechanism should be introduced to allow credit unions to appeal regulatory decisions made by the Central Bank to an independent body. The report reflects the ILCU's view that the regulator reserve ratio is a crude and blunt instrument that does not take account of the risk faced by credit unions.

On investments, the committee recommended that all parties participate constructively in the consultation paper on the credit union investment framework, CP 109, while expressing concerns that some of the proposals would limit the potential investment yields for credit unions. It also recommended that the credit union movement be empowered to contribute to alleviating the housing crisis and that the liquidity rules were overly focusing on cash and that consideration be given to investment in bonds as liquid assets. On levies, it was recommended that those imposed on the credit union sector be urgently reviewed transparently to ensure there was a clear rationale and legal basis for any levy imposed. The common bond was also emphasised. I am sure people are aware of it. The committee recognised the common bond structure as a unique and distinct characteristic of credit unions. For that reason, it supported retention of the common bond, as any dilution of that feature would permanently damage the credit union movement.

It is important to acknowledge, as the Minister of State has, that the credit movement is a fantastic asset. The Minister of State has acknowledged that. Like any institution that involves public funds or people putting their money into it, it needs appropriate and proportionate regulation. There has been much consolidation in the sector. The credit union movement has served the country well and it is ready and willing to serve it well into the future. It has ambitious targets for growth and to become involved in sectors in a measured, balanced and reasonable way to alleviate needs in society. A lot of effort needs to be put in by departmental officials, the Minister of State and all of us to find where the blockages are and discover what the resistance is, if there is any. Let us try to work together to deliver houses.

I refer to using funds for people who are homeless and living in emergency accommodation. They are not in a position to buy houses at the prices at which they are being sold, but they are looking for affordable houses. Perhaps there is scope to provide not just social houses but also affordable houses, perhaps on a shared ownership or equity stake bais or whatever it happens to be. It is important to acknowledge that the report states credit unions have become a part of the fabric of the financial sector. There are 27 recommendations and I am not going to go through all of them. We all know what they are. I have only eight minutes in which to contribute, but I could talk for hours about this issue. It is a good report. Well done to the committee and those involved in the preparation of the report. I look forward to its recommendations being implemented and the credit union movement thriving into the future.