Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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23. To ask the Minister for Finance if following the the recent analysis by Social Justice Ireland which stated that Ireland’s poorest 10% lost 18.4% of their disposable income since the start of the crash in 2008, by contrast the richest 10% lost 11.4%, if he will support the introduction of equality budgeting or the equality impact assessment of all future budgets. [52791/13]

Michael Noonan (Limerick City, Fine Gael)
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The Social Justice Ireland (SJI) report to which the Deputy refers, makes reference to the percentage change in average real incomes by decile of disposable income per adult equivalent between 2008-2011. These figures capture wider effects on incomes over the period which are not as a direct result of budgetary measures taken during the period. A more recent analysis by the ESRI focuses on the impact of budgetary measures and shows that the largest reduction in income on this basis over the period was experienced by those in the top decile. The lowest reduction in income was experienced in the third decile from the bottom. This is consistent with previous analysis by the ESRI, the European Commission and the IMF which showed that the richest bore the highest burden. Whilst it is regrettable that the first decile may have experienced losses of close to 12%, this is far below the SJI estimate of 18.4% and also below the ESRI estimate of the losses experienced by the highest decile of close to 16%. I also note that the ESRI estimate of losses for the top decile is higher than the SJI estimate for that decile.

Maintaining fairness in the budgets while ensuring the public finances return to a sustainable level is of upmost importance and my department has a number of procedures in place to assess the distributional impact of budgets. These procedures include a distributional analysis of taxation measures, published in the budget book and performed on various income levels for the different categories of income earners. These categories include single individuals, married one-earner couples with no children and married one-earner couples with children. Where possible a separate distributional analysis estimating the impacts on disposable income by income decile using SWITCH, the ESRI Tax-Benefit model, is also undertaken in evaluating various taxation options. Illustrative examples are included in the budgetary documentation.

In addition to these measures I would advise the Deputy that my Department received over 700 pre-budget submissions this year from a variety of sources, both from individuals and organisations. It is a standard part of the budgetary process that each submission is examined and taken into account during the formulation of budget measures. This allows for the opinions of a cross section of society to be considered in the preparation of the overall budgetary package.

While achieving a fair and balanced budget is an important guiding principle in preparing budgetary options, the surest way of making a positive impact on disadvantaged people is through jobs and growth. The budgetary measures over the period concerned have been formulated with a view to promoting economic growth and this is reflected in the most recent employment data showing strong jobs growth in the economy and reductions in unemployment.

In addition, beyond the evaluation of budgetary measures; the Cabinet handbook requires a statement on the likely effects of the decision sought on gender equality, persons experiencing or at risk of poverty or social exclusion and persons with disabilities to be included in Memoranda to Government. Furthermore, I would like to reiterate that the State and its bodies take the provisions of equality legislation into account in the development and delivery of policies and services. These procedures ensure fairness and balance in Government decision-making beyond the budgetary process.

Michael McGrath (Cork South Central, Fianna Fail)
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24. To ask the Minister for Finance the steps being taken by the regulatory authorities to ensure the health of the credit union sector and that any weak credit unions are supported; and if he will make a statement on the matter. [1630/14]

Michael Noonan (Limerick City, Fine Gael)
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Under section 84 of the Credit Union Act 1997, the functions of the Registrar of Credit Unions at the Central Bank are to regulate credit unions with a view to the protection by each credit union of the funds of its members and the maintenance of the financial stability and wellbeing of credit unions generally.

The Registry of Credit Union applies a risk based approach to the supervision of credit unions which supports early identification of problems and mitigation by credit unions of risks identified. The Probability Risk and Impact System - PRISM, is the Central Bank’s risk-based framework which allows for the identification of risks by their impact on financial stability and the consumer and by the probability of the risk occurring.

The Government established the Commission on Credit Unions in May 2011 to make recommendations in relation to the most effective regulatory structure for credit unions, taking into account their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members’ savings and financial stability. The Commission published its final Report in March 2012 and over sixty of its recommendations have been implemented in the Credit Union and Co-operation with Overseas Regulators Act 2012. The Government has accepted fully the Commission on Credit Union’s Report and the recommendations are currently being rolled-out under the Credit Union and Co-operation with Overseas Regulators Act 2012.

The Credit Union and Co-operation with Overseas Regulators Act 2012 helps underpin the stability of credit unions. The Act contains measures to reform and strengthen credit unions and deals with four broad areas namely:

- Prudential regulation: including reserves, liquidity, lending and risk management

- Governance: dealing with the roles and responsibilities of the Chair, Board, Manager and Board Oversight Committee

- Restructuring, including the establishment of the Credit Union Restructuring Board – ReBo: restructuring via transfers, mergers and amalgamations on a voluntary, incentivised and time-bound basis

- Stabilisation: provision of support to credit unions that are viable but undercapitalised

The Act is being commenced in accordance with the published Implementation Plan, which will allow credit unions sufficient time to prepare for these changes.

The Government has made available €500 million to support the stability of the credit union sector. This amount is divided between two funds with €250 million in each. The Resolution Fund which provides funding for credit unions requiring resolution and the Credit Union Fund which provides funding for voluntary restructuring under ReBo. A stabilisation levy will be introduced in 2014 to support credit unions that are under capitalised but are otherwise viable.

ReBo is a statutory body set up to facilitate the restructuring of credit unions on a voluntary, incentivised and time-bound basis. The focus of restructuring is to bring stability to the credit union sector without impinging on some credit unions to succeed on a standalone basis. All restructuring proposals require Central Bank approval.

Under the Central Bank and Credit Institutions (Resolution) Act 2011 the Central Bank can take resolution action where necessary via a High Court process. This provision was used to safeguard members’ savings at Newbridge Credit Union.

The Registry of Credit Unions introduced a Fitness and Probity regime on 1 August 2013 for credit unions with total assets of greater than €10m. This was the beginning of a phased approach to the introduction of Fitness and Probity measures for all credit unions, with the second phase due to commence on 1 August 2015 when all remaining credit unions will be brought within the scope of the regime. Currently relevant credit unions require pre-approval by the Central Bank for a Chair and Manager prior to either of these positions been taken up. This will ensure that any individual carrying out these roles is fit and proper to do so.

This Government has introduced a number of measures in relation an effective regulatory structure for the sector and I am satisfied that these measures will underpin a stable credit union sector into the future.