Rónán Mullen (Independent) | Oireachtas source

Cuirim fáilte roimh an Aire Stáit agus guím gach rath ar a chuid oibre. Some 3 million Irish people are members of credit unions at present, following in a long tradition of co-operative action within local communities. The movement started more than 60 years ago to try to free communities from the grip of moneylenders and loan sharks. Sadly, those practices and those practitioners are still with us and credit unions still act as a bulwark against them, so they deserve every possible support and encouragement from the State.

I want to say a few words about how we might give that support but first I wish to ask a question about the rationale for the Bill. I apologise if the question is due to a lack of understanding on my part. Section 43 of the Credit Union and Co-operation with Overseas Regulators Act 2012, which established the Credit Union Restructuring Board, provides that the Minister may, by order, dissolve the board and include in the order such incidental, ancillary or consequential provisions as the Minister considers necessary or expedient. It goes on to say that a draft of his order must be approved by resolution of both Houses of the Oireachtas before having effect. It may well be that I am missing something and perhaps the Minister of State's official can assist us.It seems to me that the provisions of sections 6 to 13 of the Bill before us today, dealing with the dissolution of the board and the transfer of its functions, property, records and so on, could all have been with by such an order under the 2012 Act without need for further legislation, or am I wrong? I might well be but I would be grateful for an answer to that on the record of the House. Following that line of thinking, I would have thought that resolutions of both Houses would have given the Minister of State the necessary comfort that any order he made to dissolve the board would be within the existing law and the Constitution. I ask this, because while our job is to legislate, as a rule, we aim to avoid new legislation if it is not strictly necessary. As I have said, perhaps it is but at the moment I do not see how the Bill before us today is necessary or adds anything to existing law. However, I would be grateful for a correction, clarification or both on that.

From 2010 to 2013 there was an air of crisis being spread about the credit union movement which was perhaps unwarranted looking back. While there were a number of high-profile cases of credit union failures, including those in Newbridge and Rush, the sector stabilised significantly from 2013 onwards. The problems with the sector in fact paled in comparison with those of the banks and of the €250 million given to the restructuring board to assist credit unions, only €30 million was eventually needed. Maybe it is hindsight but I do recall raising the situation in Newbridge in the House at that time and I believe I spoke about the possibility of the hyping-up of the so-called crisis in the sector and that it might risk long-term reputational damage.

As regards the work of the Central Bank and the restructuring board, we need to reflect on whether the restructuring went too far in some respects. The overall number of credit unions fell from 406 to 246 in the last decade due to Central Bank pressure, with one quarter of mergers leading to office closures in local communities. A number of mega credit unions were formed, for example, in north Dublin, where credit unions in Skerries, Portmarnock, Balbriggan, Baldoyle, Howth, Glasnevin, East Wall and Clontarf, were all merged into one. Another merged entity took in credit unions in Coolock, Artane, Ayrfield and Swords. These are giant entities covering enormous populations and they were given comically sterile and anodyne names such as "Progressive Credit Union", or "Members First Credit Union", which are not exactly imaginative. I mention this because the appeal of credit unions is that people feel that they are part of something in their community and that they have a stake in it, and that is important. In encouraging these mass mergers, in most cases among credit unions where there were no serious financial problems, perhaps we robbed them of the possibility of being seen as local.

Credit unions are going to become increasingly important again as banks continue to antagonise small customers. Just yesterday, AIB and Bank of Ireland, which are both effectively State-owned, hiked their fees substantially for current accounts. As we know, small businesses also face charges for lodgments and other transactions. Meanwhile, many credit unions, including one of the mega entities I mentioned earlier, are capping savings and cancelling dividends because they literally have too much on deposit. Credit unions should be encouraged to lend more to small businesses, but also to individuals. One of the impacts of heightened regulation of the sector by the Central Bank in the past decade is that lending has actually decreased. As of last year, credit union loans comprise just 27% of their total assets, compared with around 65% for AIB and Bank of Ireland. If one does the maths, there is about €7 billion in credit union funds, which they could safely lend. Lending rules now allow credit unions to grant mortgages, but even the largest of them can only do so up to a limit of 15% of their total assets. In conclusion, surely we should be doing more to allow credit unions to lend this money cheaply to people. There are huge barriers which they face in terms of approval for any new products that they have, and they are barriers which the Minister of State can, and hopefully will, work to remove.