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Dáil Éireann debate -
Tuesday, 8 Mar 1966

Vol. 221 No. 7

Committee on Finance. - Credit Union Bill, 1966: Second Stage.

I move that the Bill be now read a Second Time.

The purpose of the Bill is to provide a suitable legislative framework for co-operative societies known as credit unions. The provisions of the Bill follow generally the recommendations of the Committee on Co-operative Societies, the Chairman of which was the Registrar of Friendly Societies. A credit union is defined in section 2 of the Bill as a co-operative society consisting of individuals having a common bond and formed for the purpose of promoting thrift among the members, creating a source of credit for them at a fair and reasonable rate of interest and using and controlling their savings for their mutual benefit. This kind of financial institution is well known in other parts of the world as a special form of co-operative effort and there is a widespread demand for its legalisation in this country.

The development of the credit union movement is set out in the report of the Committee on Co-operative Societies and it is hardly necessary for me to go into detail on that particular aspect of the matter; a brief outline of this story may, however, be of interest to the House. The first co-operative credit society was founded in Germany in 1849 for the purpose of combating usury. Societies of this kind spread rapidly on the Continent but it was not until 1900 that the first North American equivalent was set up in Quebec. Enabling legislation was enacted in that province in 1906 and the credit union idea quickly spread in Canada. Many Deputies will be familiar with the story of Monsignor Coady whose efforts to solve the economic difficulties of the people of Nova Scotia in the late twenties and early thirties have found a special place in the history of co-operative endeavour. This resourceful and practical man made good use of credit unions in his fight against poverty.

The first United States Credit Union Law was passed in 1909 by the State of Massachusetts. By 1934 credit union laws had been passed in 39 of the United States and a Federal Credit Union Act became law in that year. The United States credit unions also promoted in that year the Credit Union National Association and a mutual insurance society with the object of providing suitable services for credit unions. The Credit Union National Association now promotes the credit union movement all over the world and one of its representatives visited Ireland in 1959 to give evidence before the Committee on Co-operative Societies. In the credit union movement it is the practice for each country to have its own national league and, accordingly, the Credit Union League of Ireland was set up around this time and it was admitted to membership of the Credit Union National Association in November, 1961.

To-day there are credit unions in all of the United States, in all provinces of Canada, in Central and South America, in certain Pacific countries and also in several European, African and Asian countries. The movement has a total membership of about 30,000,000 persons and assets in the region of £5,000 million. The total number of individual credit unions is about 50,000 and it will be seen from these figures that the average asset for each unit is about £100,000.

I think it desirable also to give Deputies some idea of the history of somewhat similar bodies in this country. Under the Friendly Societies Acts, special provision was made in the final quarter of the last century for the registration of societies formed for the purpose of creating funds by monthly or other subscriptions to be lent out to or invested for the members of the society. From the point of view of administration and finance, societies formed for this purpose were on the whole extremely unsatisfactory, particularly in the case of non-agricultural loan societies. In 1917 the authority for the registration of loan societies was withdrawn and substituted by a new one which was limited to societies formed to grant loans for agricultural purposes. Since that time, therefore, it has not been permissible to register non-agricultural loan societies, but those which were established prior to August, 1917, were allowed to continue in business and there are now about 23 of them on the register with total membership of about 20,000 persons.

As regards agricultural credit societies, the first of these was formed in 1894 and was quickly followed by a large number of others. In 1914 a Commission on co-operative credit drew attention to a number of inadequacies in the operations of these societies. They put forward certain recommendations to rectify the position, but war broke out before any action could be taken on their report. A later Commission on Agriculture endorsed these recommendations in an interim report on credit which was issued in 1923. In 1927, however, the Agricultural Credit Corporation was set up under the Agricultural Credit Act of that year and this, in effect, put an end to the establishment of further societies of this kind in the private sphere. No new agricultural credit societies have been registered under the Friendly Societies Acts since 1928 and there are now only seven such societies actually operating.

In paragraph 125 of their report, the recent Committee on Co-operative Societies stated that having considered the whole question they were of opinion that savings and loan societies conducted on the credit union plan, with proper safeguards, would be a useful form of co-operative effort. They pointed out, however, that with the withdrawal of the statutory authority in 1917 for the formation of loan societies other than those in the agricultural sphere, various legal difficulties stand in the way of the formation of credit unions in this country. They recommended, accordingly, that the Industrial and Provident Societies Acts should be suitably amended in order to make provision for the registration of credit unions. In paragraph 128 of their report, they set out in some detail the kind of provisions which they feel should apply to credit unions.

In paragraphs 129 and 130 of their report the Committee dealt with the question of supervision of credit unions. They recommended that in any legislation to deal with these societies provision should be made for supervision by some authority other than the individual societies. This should involve, they felt, an annual inspection and intermittent surprise inspections and also instruction and organisational assistance. The aim should be to have supervision provided by a representative organisation as soon as possible but in the early stages the cost might, they thought, have to be borne by the State.

Since the report was published, the credit union movement has expanded rapidly in this country, mainly through the work of the Credit Union League of Ireland. There are, at present, some 136 credit unions here with assets well in excess of £1 million. Individual unions which wish to become affiliated to the League must comply with the League's requirements. It is the intention of the League to employ suitably qualified personnel whose jobs it will be to make the kind of inspections, annual and surprise, which were envisaged in the report of the Committee on Co-operative Societies. The need for interim supervisory arrangements on the part of the State has, therefore, been obviated as the ideal form of control by a representative organisation on the lines which the committee had in mind is now developing.

On this question of supervision, I should like to draw the attention of Deputies to the three reservations which were appended to the report of the Committee on Co-operative Societies. Two of these reservations are fiatly opposed to the idea of State intervention; the third, which was put down by a credit union representative, expresses doubt about the value of State subventions to credit unions. I agree with the general tenor of these reservations and have drawn up this Bill on the basis that the credit union movement should be allowed to regulate its own affairs as far as possible.

I have no doubt that the Credit Union League of Ireland with the assistance of the international credit union organisations will keep a watchful eye on all credit union activities in this country and that it can be relied upon to take all necessary steps to protect the interests of the public.

Nonetheless the unhappy history of credit societies in this country in the past suggests that any legislation dealing with organisations of this kind which handle money should be tightly drawn and should be provide ample powers to deal with any undesirable situation that may arise. It will be noted that the Bill does, in fact, contain many such provisions. Apart from detailed safeguards and restrictions of one kind or another which are interspersed throughout the Bill, Deputies will note the specific provision in section 12 for the establishment by each credit union of a supervisory committee. The function of this committee is to oversee the activities of the directors and other officers, and the manner in which this function is to be discharged is set out in section 17.

There are ample clauses designed to ensure that the supervisory committee will be independent of the other officers of the credit union and will be in a position to carry out its duties adequately. I should also like to draw attention to section 27 of the Bill which provides for the establishment by me of the Credit Union Advisory Committee. This will be a body of persons having a knowledge of accountancy and other matters of significance in relation to credit unions who will keep an eye on developments in this field and advise me as to any action I should take to safeguard the interests of the public in this sphere.

It will be noted from section 35 that the powers to which I could resort in making any such regulations are very comprehensive. Normally, I would not think it desirable to seek such wide powers from the Oireachtas but in this particular case I think it is important that I should have authority to deal speedily with any situation that may arise by means of regulations. One of the most important items in section 35 is paragraph (c) of subsection (1); this paragraph enables the Minister for Industry and Commerce, after consultation with the Credit Union Advisory Committee, to take a more direct part in the auditing of credit unions if this should be demonstrated by experience to be necessary.

Deputies will also notice the power given by section 33 of the Bill to the Registrar of Friendly Societies to petition the High Court for an order to wind up a credit union if it is unable to pay its debts or wilfully violates the provisions of the law. I think it no harm to mention here too that the Industrial and Provident Societies Act, 1893, into which this Bill is being written, already contains a number of provisions which will assist in ensuring proper supervision of the activities of credit unions. Section 20 of that Act will require each credit union to submit an annual return in a prescribed form. Under section 18 of that Act, there is provision for the inspection of the books of a society by an accountant or actuary appointed by the Registrar of Friendly Societies, while section 50 provides for a full investigation of the affairs of a society. Finally, the Industrial and Provident Societies (Amendment) Act, 1913 requires every society to have its accounts audited by public auditors appointed by the Minister for Industry and Commerce.

It is not necessary for me to refer to the other provisions of the Bill as these will be the subject of closer examination on Committee Stage. To a substantial extent, the Bill is modelled on the legislation prevailing in other countries where the credit union movement has been a success and where failures have been rare. A considerable amount of technical drafting difficulty was encountered in fitting legislation on these lines into the Industrial and Provident Societies Acts. This has given rise to some delay in producing the Bill, but I am satisfied that we now have before us a set of provisions which will provide a suitable basis for regulating the affairs of credit unions in accordance with the principles accepted internationally in relation to those bodies.

It is necessary, I think, to say that though we expect the spread of credit unions to give rise to increased savings which will help in the fulfilment of our plans for economic development, the credit union movement must be regarded as being of social as well as economic significance. The object of the movement is to bring people together in co-operative endeavour so that they may help each other by pooling their financial resources. Participation in enterprises of this kind has prevented many people from falling into the clutches of moneylenders or getting into difficulty through over-involvement in hire purchase commitments.

Apart from this particular aspect of providing alternative sources of credit at fair and reasonable rates of interest, it has been found that by taking part in the management of a body such as a credit union, the members gain an insight into the meaning and purpose of money, and their understanding of the workings of the economic system is greatly improved. Most important of all, perhaps, people who come together like this to help each other through their own efforts develop that independence of outlook which is such a refreshing feature of the co-operative movement, particularly nowadays with the prevailing tendency to seek State assistance for so many activities.

I presume that it is for these reasons that the credit union movement has always held the interest of churchmen. From the very begining, the Credit Union Movement has had a socio-religious background, but at the same time it seems to have been free from any element of sectarianism. I understand, in fact, that in many parts of the world the organisations promoting this form of co-operative self-help have included representatives of diverse religious denominations who have worked together in the greatest harmony to achieve the aims of the union movement.

Deputies will be interested to know that the late President Kennedy of the United States, where credit unions have had a long and happy history, was an admirer of the credit union movement. His messages of support and encouragement are cherished by credit union people all over the world. Our own President, too, has given his support to the movement and a message which he transmitted to the International Credit Union Year in 1962 pointed out that "the encouragement of thrift and the provision of credit for desirable objects is of the greatest individual, local and national benefit". I might mention here, too, the message conveyed in 1958 by the Secretary of State to Pope Pius XII in which it is stated that "the Holy Father could not fail to derive comfort from the knowledge of the meritorious achievements, both economic and social, of the credit union movement in pursuance of the laudable purposes for which it was founded".

In commending this Bill to the House, I think it is my duty to state that I fully realise the element of risk involved in permitting relatively un-skilled persons to handle substantial amounts of money. I am satisfied, however, that if we maintain a sufficiently careful watch, it will be possible to take corrective action in time if anything should appear to be going wrong, and this Bill contains all the necessary powers to this end. In any event, all the authorities associated with the credit union movement are satisfied that if this risk were measurable in terms of evil, it would be very insignificant indeed in comparison with the very substantial amount of good which the enactment of this Bill will make possible.

The credit union movement in Ireland has not yet become countrywide but it has made an impact in various parts and in my view, it is spreading all over the Twenty-Six Counties to the stage at which there will be a credit union in almost every parish. In my own parish, I am a director of our credit union and I know the good being done by it. We must accept, of course, as the Parliamentary Secretary has pointed out, that if we are to have an organisation dealing in other people's money, and in very large sums of money as expansion takes place, we must have governing legislation, just as we must have a Companies Act or all the extremely complex legislation which we have in relation to the various movements that exist within our society. Therefore a Credit Union Bill is necessary and it is necessary that this House should regard it as a most important measure because of the expansionist nature of the movement.

The fact that before the end of this decade we may have credit unions in every parish means that there will be a variation in the degrees of efficiency within the different credit unions. This is another feature which must be taken into account and must be the subject of this legislation so that those who invest their money, those who give it into credit unions so that their neighbours may borrow, or they themselves may borrow when their time of need arises, can be assured that that money is as safe as if it were in a bank or any other financial institution governed by the most comprehensive legislation which has been passed in this House over the years.

The credit union movement within the community is really the pooling of resources on the basis that money in the sock does nobody any good. The need for money for the family or for the individual varies from time to time as purchases of capital goods, of furniture or, indeed, even of consumer goods, varies according to need at any time. The ability of a group in a parish to lend money to somebody who needs a new milking machine means that he can pay for it with a fixed sum from his monthly pay cheque. It means that when he is going to buy it, he has a bargaining power that he would certainly not have if he were dealing with an ordinary hire-purchase company, or the company selling or installing the machine and providing the capital over an extended period. This bargaining power can be considerable when one considers that there is perhaps 25 per cent or 33? per cent profit on this machine and the man with money in his hand can save as much as 15 per cent or 20 per cent of the cost when the credit union provides the capital.

This is not to say that the credit union will not charge him interest. As credit unions expand, the position in the past has been that they have found that their honorary secretaries could no longer deal with all the work and they had to employ people to deal with the expanding turnover. It is through the payment of interest that the opportunity is provided for the borrower to borrow again when his need arises for a second time. As I said, there is a great necessity for safeguarding those who place their money in credit unions and this legislation will provide that safeguard. It is extremely detailed legislation, and if I were to say something which might be regarded as a criticism, it is that, in my view, the Bill should have been accompanied by an explanatory memorandum. It is not a very difficult Bill to understand but many of the provisions relate to provisions and sections in other Acts which have already passed through here and it would have helped Deputies considerably, and the Opposition Parties, if such an explanatory memorandum had been provided.

Another facet of this legislation is that directors and members of credit unions all over the country are intensely interested in this Bill. Many of these people have not had experience of legislation such as most Deputies have had. For instance, three Catholic curates who are directors of credit unions in their parishes, asked me to get them copies of the Bill. I am sure that these good men would have gained a greater knowledge from their first reading of the Bill, and would have been in a better position to contact their Deputies and make representations, if an explanatory memorandum had been issued as well.

Another great advantage of credit unions is that when a borrower gets money, while he may pay a slightly higher rate of interest than he would pay to a bank manager, there is no signature required, no surety sought and there is also something which is of great value, that is, that if he dies, his debt is wiped out. This is something which, in a small rural parish such as the one I live in, is of great comfort to a man who will be in the bargaining position of being able to buy a television set and who knows, that even if he is incurring a debt of £60 or £70, if he dies, his wife will then own the television set and that any indebtedness he has will be wiped out. This seems to me to be one of the best features of the movement. I do not want to expand on the other insurance features which are there as well but there are many and the fact that a debt is wiped out is one of the best among them.

Mention is made of the fact that credit unions are non-religious and that persons of diverse religious denominations are among their members and are actively participating directors and members. That has been the experience in my part of the country. We have in our parish members of the different denominations coming into the credit unions seeking to do good for the people, whatever church they go to on Sunday. This is an excellent thing and something which I hope will be preserved. I am not a very religious man but I think that the coming together of all these denominations within this movement is something that is of immense value.

I do not think this is a Bill that should pass through the Dáil tonight or one that should not have a long and detailed examination on Committee Stage. It is a Bill we have to look at. It is not long since it was introduced and it came to us at a time when many of us were reading volumes of material in regard to the Budget that will be introduced tomorrow. I feel that the Committee Stage should be delayed for a week or two and that after that there should be an opportunity for giving it a detailed examination. There is also the point that those involved in the credit union movement should have the opportunity of examining the Bill and making representations not only to the Minister but also to individual Deputies.

Like Deputy Donegan, I think it was a mistake that an explanatory memorandum was not issued with this Bill because it is pretty long and of some detail. Having said that, I think Deputy Donegan will agree with me that this is one of the simplest pieces of legislation on a matter of this kind introduced in this House. For that reason, those who drafted this Bill are to be congratulated. Engrossed as we are in the health documents and Budget literature, we do not have as much time as we should like and therefore the draftsmen are to be congratulated on producing a measure which is not ambiguous.

I regard this measure as the first official recognition of this great and worthwhile credit union movement. It has been growing in recent years. Though not a member, I had occasion to visit the offices of a credit union recently. Prior to my visit, I read up some of its history, to which the Parliamentary Secretary referred today, and became more and more enamoured of it as I read more and more about it. Even though the legislation is absolutely necessary, it is apparent that those who have formed credit unions have appointed as directors, secretaries and so forth, very reputable people. We do not know if in the history of the credit union movement during the past seven or eight years anything went wrong but those who are members of the movement would be the first to agree this legislation is necessary. In fact, there has been a clamour in some quarters to have the legislation we now see before us. During Committee Stage, I shall have more to say on it but it does not seem to be an undue interference with the detailed, ordinary affairs of the credit unions. All the necessary precautions are there for the ordinary individual and that, I assume, is the main purpose of this legislation.

At this stage, like the Parliamentary Secretary and the previous speaker, I should like to add my words of praise to the credit unions in this country for their efforts in the promotion of thrift. This movement seems to have succeeded in inducing people to save where many Government institutions have failed. This is saving with a difference. It is not just the ordinary business of putting in money and getting a rate of interest. This, as the Parliamentary Secretary has said, has other functions, other purposes which are desirable. One of our shortcomings, in recent years particularly, has been the reluctance of our people to save. As an aside, may I say there has not been any inducement in this country to people to save because the usual method is through the Post Office, and if one has regard to the fact that the 2½ per cent interest rate offered by the Department of Posts and Telegraphs has not changed for donkey's years, one readily understands the reluctance of small holders to save.

This is a movement in which they can both save and borrow. It is a movement—the Parliamentary Secretary touched on it briefly—of an educational character as well because it sets out to teach people about money. One of the principal defects in the makeup of the Irishman or Irishwoman has been the lack of knowledge of money. We are said by economists. We may have our suspicions of whether they are giving us the right advice, but both Ministers of the Government and laymen alike must take their advice. Here is an organisation pledged to teach members about finance generally, particularly about investment, and for that reason the movement deserves the support of the House and the country. I assume also that members will be taught about investment.

This country, particularly in the past year or two, has been crying out for investment of money. It is not any great secret that there is a lot of money in this country which is not doing any work. People have saved money at home, people still keep it under the mattress or in the thatch and they might as well have so many pebbles for all the use it is. If they want to do a service to the country and to themselves, they should invest that money. They should be urged to get the money into National Loan, the Post Office or into State or semi-State organisations who will make the money work not alone for the individuals concerned but for the country. I believe there is a lot of undisclosed money in the country which could be put to many useful purposes.

This credit union movement helps people to help themselves. The Parliamentary Secretary referred to the difficulties people often get into because of hire purchase commitments and moneylenders. Everything in the credit union movement as far as borrowing is concerned is above board. It lends at reasonable rates of interest. It concerns itself with people of integrity and character, as Deputy Donegan has told us. For instance, if a single young man in a reasonable job wants to buy a motor cycle or an autocycle—some semi-luxury article—he will be facilitated by a credit union. He does not have to have security. In this country it seems that when one approaches a bank or any similar institution for a loan one must show oneself to be a man of means before a loan is advanced. This is one of the defects in our social fabric and it affects the agricultural industry particularly.

A farmer knows what happens when he approaches an organisation like the Agricultural Credit Corporation. It appears that no farmer will approach the Agricultural Credit Corporation for a loan if he has not financial resources of his own. When he goes, he is asked immediately for two names as securities. He is asked to show what property he owns. Therefore, the example set by the credit union could be well followed by many of the lending institutions in this country. They take a man for what he is, not for what he has. It is one of the outstanding features of the credit union movement. If a man shows integrity and character, he should be advanced money for a useful purpose. The idea of giving a loan to a man for what he is, for his character and integrity, could well be copied by many State and semi-State lending organisations. In this measure, there is adequate protection for shareholders' money. There would seem to be very many safeguards, all of them adequate, for that sort of protection.

I would like the Parliamentary Secretary to tell us a little more about an application for membership and, say, a subsequent refusal. Section 5 gives anyone refused membership the right of appeal to the District Court. Is this an innovation or does it apply in respect of the ordinary co-operative society? On what basis will the person be judged by the District Court? Will it again be his known integrity or otherwise? Who is going to give evidence for or against him? In an ordinary creamery co-operative society, have the directors and members the right to refuse membership and, if so, has the person so refused the right of appeal to the District Court?

Section 6 lays down the rules of a credit union and gives certain guidelines. I would like to know if these rules are to be of general application or may separate rules be made for each branch? I would like the Parliamentary Secretary to say why it was decided in section 22 that dividends are not to exceed ten per cent. I am sure it is not a figure he pulled out of a hat and I would like to know is there any particular significance in the ten per cent. In section 23 there is a requirement that ten per cent of surplus funds be put to reserves. I do not question the principle of that but I would like the Parliamentary Secretary to say why that particular amount was fixed.

Section 27 allows the Minister to establish a credit union advisory committee. Is this also part of legislation in other countries? I can see the desirability of it but I would like to know if it is an innovation here or is it in other countries as well. The Minister has power to appoint seven members, not less than two of which will be accountants. He is also given power to appoint the chairman. I do not know what the functions of the chairman will be. It would be right to assume, however, that the seven persons whom the Minister appoints would be quite capable of choosing their own chairman. I do not say there is anything sinister in the Minister taking this power. Maybe he has some person with special qualifications in view.

I would like also to have an idea of what the remuneration of the members will be. I would like the Parliamentary Secretary to justify the payment of the members of this committee. I say that not to suggest they should not be paid but merely as a method of having the Parliamentary Secretary say what their functions will be and how much of their time will be taken up by this. We have a variety of advisory committees here. In the majority of cases, the members' fees are £400 or £500 per year. But this is another little burden which I assume will have to be paid by the taxpayer. If the members are paid £600 or £500 per year and the chairman £1,000 or £2,000, that will be another little addition to the tax burden. I am not opposed to the idea of paying them— I would be if these were purely nominal positions—but the Parliamentary Secretary should tell us what the remuneration will be and what amount of their time will be taken up by this.

Section 35 caused me some concern. This is the dangerous section in any Act of Parliament. However, let me say for those who drafted this Bill that it does not appear to be as dangerous as other pieces of legislation introduced. Usually the section on regulations is general and vague, giving the Minister power to do almost anything at any time. In this Bill the Minister may make regulations in respect of 12 activities in which a credit union may be involved. I do not think one could take exception to any of them. However, they need some explanation, particularly subsection (g), which gives the Minister power to prescribe the investments, including investments other than those permitted by section 38 of the Principal Act, in which a credit union may invest its funds. I do not know the usual places they invest now. I am sure the Parliamentary Secretary and Deputy Donegan do. I feel this needs a little more explanation. Are they to be confined to Government loans, investment in Government projects and such things? I am sure the Parliamentary Secretary will be able to give us the information, if not when replying then on Committee Stage.

I do not see in this Bill—maybe I have missed it—a requirement that the rules and constitution of the union be given to everyone who becomes a shareholder. This is elementary in the trade union movement. Every member of my union must get the book of rules when he becomes a member. I think it desirable to have a provision in the Bill to the effect that shareholders must be furnished with not alone a shareholding certificate but with the book of rules. In that way they can see what their entitlements are, what the functions of the directors and so on are, what rights they have of appeal to the District Court or to the Minister and what rights they have to consult or lodge complaint with the advisory committee. The remaining matters of detail may be dealt with on Committee Stage.

I would like to add my voice in welcoming this Bill. This legislation will now give the confidence necessary for any group of people who set themselves up to foster saving. One of the greatest things needed in this country is education in money matters for our people, and in this movement we have the answer. In view of the increasing wealth of the country, it is necessary that all sources of wealth be tapped. The ordinary person should realise there are more ways in which he can assist the economy than by simply lodging money in the Post Office. Previous speakers made the old suggestion that the rate of interest in the Post Office Savings Bank should be increased. I do not believe that such an increase would bring in greater saving. The rate of interest is not the enticement for people to put money in the Post Office.

With such a movement the ordinary people can be educated in financial matters. There is evidence enough of the great need for this education from the large number of people who have got into difficulties through hire purchase. We have heard of many people getting into grave financial difficulties and of people even being forced to emigrate because of hire purchase commitments. This credit union movement is a sign of the spirit of modern Ireland. We have heard it said recently that Sinn Féin should be the call of 1966 as it was in 1916. This movement is a Sinn Féin effort. It is to help ourselves and an attempt to get away from the mentality of always looking to the Government for help, that the Government must provide money for this or for that. I see great hopes of doing away with this attitude through the credit unions and of creating the spirit which is necessary if we are to achieve the aims set out in our economic programme.

I am not myself a member of a credit union but it is a very strong movement in the city of Galway, and I have seen the tremendous benefit it has been to the people who have joined it. I would ask the Parliamentary Secretary to use every opportunity available to him to advocate support for this credit union movement. Therein lie great hopes for the future of this country, and I should like to see more of this spirit.

This Bill is very welcome, particularly to the members of credit unions throughout the country. They feel it will put credit unions on a proper basis. We are very lucky in Kilkenny that a credit union has been established in the parish and the people there who established it are to be commended for the work they are doing for the general good of the people. They have studied this Bill and advise me they have no great fault to find with it, although there may be a few matters to be dealt with on Committee Stage.

They did suggest one or two things to which I should like to draw the attention of the Parliamentary Secretary. Section 11 (6) says that a director or any member of a committee of a credit union cannot get a loan in excess of the sum of the nominal value of the shares and deposits in the credit unions. They feel that would be an embarrassment to any man who is appointed a director of a credit union. Other members, I understand, could get a loan up to ten per cent of the total assets, but apparently a director is not in that position. An amendment should be introduced on Committee Stage in that respect.

A further point is that a director can hold office only for three years. The chairman should be allowed to hold office for at least four years in order to preserve continuity in the board of directors. These men are doing very good work in Kilkenny and there has not been one defaulter since the credit union started some years ago. I attended their annual meeting as a guest recently and I was very much impressed by the way the business was conducted. Section 35 (b) requires:

... a credit union to take out insurance of a specified type in relation to the loans, deposits or shares of the members.

I understand the money has to be sent out to America for the purpose of insurance. There is no insurance company in Ireland or in England prepared to take up that business. I would suggest the Government should enable some insurance company in the country to handle this type of business, and I should be glad if that point were looked into. I know that in the hands of the men who are in Kilkenny —and I am sure it is much the same in every other area—the credit union will expand in future years.

I should like to welcome this measure. The credit union movement has grown in this country to a large extent over the past number of years. In the initial stages, it was slow to start but now it is growing very strongly. This Bill is to be welcomed at this particular time because it endorses the Government's recognition of the movement. It also safeguards those who put their money into credit unions and those who borrow money from them.

As Deputy Crotty has said, the credit union movement in Kilkenny has grown considerably in the last number of years, all by a completely voluntary effort on the part of dedicated men and women who are prepared to spend their free time, free Saturdays and free Sundays in some cases, for the good of the community. The credit union has helped young people getting married to buy furniture and other equipment. It has helped family men to educate their children and to buy school books and other incidentals. It has also helped old people in their time of need.

There are a few points that would be more proper to the Committee Stage of the Bill. That is why I should like to ask the Parliamentary Secretary to accept Deputy Donegan's suggestion to have the Committee Stage put back for at least a week, if not two weeks. The Bill has come fairly quickly upon us and upon the credit unions in their localities. I am aware that the people who are at the head of the credit unions knew of the general principles that were going to be outlined in the legislation, but the ordinary member of a credit union will not know about this possibly until he reads about it in the papers tomorrow. I feel, on this account, that the Committee Stage should not be taken for at least another week or even two weeks.

There is one section I would like to refer to at this stage, that is, the section dealing with the appointment of an advisory committee. I refer to section 27. I should like to know what type of people will be on this committee? There is some indication in the Parliamentary Secretary's opening statement. There is also a subsection in this section which gives power to appoint two accountants. I am greatly suspicious of those committees because it has been the practice, by successive Governments, to appoint people to committees for reasons other than the fact they were experts in a particular field. It would be a pity if there were even one person on this committee who was not a man dedicated to the ideal of the credit union movement.

We have State companies run by people with private enterprise minds and we have co-operative societies and some of them are run by people with private enterprise minds. We do not want to have the credit union advisory committee run by people with outlooks which would not concur with the outlook which the founders of the movement and those taking a part in it have. I would like the Parliamentary Secretary to state, in more detail, what his intentions are in regard to section 27 because the working of the legislation will depend, to a large extent, on the personnel of this advisory committee. The whole success of the implementation of this legislation will depend on the advisory committee, naturally, so that the success of the whole movement will, in the final analysis depend on the personnel of this advisory committee. I want to stress that they should be dedicated men who believe in the credit union movement and who have experience of it, preferably those who have experience of it both as contributors to it and as people who benefit from it.

Perhaps the Department, when this Bill has been passed, would publish it in plain language in a small booklet that could be kept, say, in the inside pocket of a man's coat or even in a man's wallet. A copy of the Bill in condensed form, should be made available, if necessary, so that it could be fitted into a man's wallet or carried in a lady's handbag and referred to at any time. I will reserve, with those few remarks, more detailed remarks for the Committee Stage.

This Bill, by and large, is a Bill which has been pressed for by the credit union movement for several years past. It may well be that it contains sections and provisions which are not entirely in keeping with the wishes of the credit union movement. Since the Bill was circulated, we have not had an opportunity of receiving from the credit union movement, and individual credit unions, their views on it. It is very important that considerable time would be given to the credit union movement to study the Bill, to take advice on it and, if need be, to lobby their TD's and later their Senators.

Quite clearly, it would be most undesirable if harm were done to the credit union movement by imposing on them legislation which they did not want, which unfairly or unnecessarily restricted them or which interfered with their operations in a way which those best in a position to know would consider as injurious to the interests of the credit union movement. I share Deputy Crotty's concern that the credit union movement have difficulty in getting insurance companies to accept the insurance schemes which are part and parcel of the credit union movement. As a result, I think, something like ninepence per member, per year, has to go out of this country in respect of various forms of insurance specified in the Bill. It may well be that insurance companies here have been reluctant to undertake the risk because, of course, all insurance constitutes a risk, until such time as credit unions are statutory bodies in relation to all financial operations. I join with Deputy Crotty in exhorting the Parliamentary Secretary to ensure that the money is kept in the State.

The Parliamentary Secretary mentioned that 136 credit unions now exist here. If he knows, would the Parliamentary Secretary be good enough to tell us how many of those are, in fact, affiliated to the Irish League of Credit Unions? I think there are a few independent bodies. I do not know why they are in the country. It would seem there is a great deal to be said for a form of national association because, I suppose, the problems of one are, to a great extent, the problems of all. Indeed, the very basis of credit unionism is that people would share each other's problems, responsibilities and risks.

What is particularly attractive about the credit union movement is that it has created bonds where the common interests were somewhat uncertain. There is no place as lonely as a suburb of a large city, such as Dublin, particularly when people, who formerly had no common interest, coming from different parts of the city and different parts of the country, find themselves thrown together on a virgin piece of land in little concrete boxes that are suddenly put up. The credit union movement stimulates in a neighbourhood which had not appreciated it before, a common interest. That is a great thing for that neighbourhood. This far transcends any immediate advantages to individual members.

Like other Deputies, I have seen the advantages of credit union groups operating in my own constituency. This constituency is made up, in the main, of the little concrete boxes to which I have referred. It consists of places such as Ballyfermot, Walkinstown, Drimnagh and Crumlin where the credit union movement, I am glad to say, has been in operation for several years. Deputy Donegan pointed out, in addition to the advantages I have already stated, that no surety is required in respect of a loan, debt liability is wiped out on the death of the person having the loan and discounts can be obtained by purchasing articles for cash rather than buying on hire purchase. The credit union movement also had the advantage of bigger buying for their members, particularly in relation to coal and other commodities which we so frequently need in our climate. I think it will perhaps accelerate the development of the credit union movement here to have this Bill but I would ask the Parliamentary Secretary not to rush it. There is plenty of time; it has been in the course of production for several years and a few months of processing this Bill in the House and in the Senate would be advantageous.

May I say I am somewhat alarmed at section 35 which gives the Minister power to make regulations? We can appreciate that we cannot perhaps in this day and age fix everything as perfectly as we might in the light of experience but we have in several sections of this Bill particularly set out limits of time, limits of finance, limits of interest and so on. But in section 35 we as much as say: "It doesn't matter what is in this Bill; the Minister can do anything he likes", while at paragraph (i) of that section we find that the Minister may alter in any way he wishes from time to time the financial or time limits prescribed by every section of the Bill. We write into the Bill several limitations and then we say: "But the Minister can change them willy-nilly as often as he wants from time to time." I think that is undesirable. Either the legislative powers or limits are necessary or they are not and we should not go to the extent of specifying limits here which people will assume are the operative ones, when, for all we know, they may be inoperative by reason of the frequency of changes made in regulations.

I was wondering why section 32 was in the Bill at all but I suppose this is probably a rule of the credit union movement; that is the one which provides that a credit union may not advertise directly or indirectly in a newspaper or other periodical publication, or on radio or television. I do not know whether that applies to a particular credit union or to the credit union movement. I suppose it applies to a particular credit union and it occurred to me that the justification for it was probably that the very basis of the credit union movement is that there may be a common bond and that it probably would not be necessary to advertise, except, perhaps, in a periodical publication published by a particular employer, a body of employers or a body of employees. Subsection (2) of section 32 could preclude advertising in a publication by a residents' association or a tenants' association.

For instance, there are large areas in Dublin in which people regard themselves as having a common bond, areas like Ballyfermot, which are as big as the city of Waterford. The city of Waterford may have its own newspaper or may circulate in adjoining areas or counties but it is essentially a local one. If a residents' association had its own journal published from time to time, I think it would be desirable to advertise. But having seen that limit and with that thought having occurred to me, it would seem to be prudent to put down an amendment to cover that kind of thing but then we see that the Minister may modify the Bill in any way he likes. Either we consider it necessary to have that restriction or we do not. But giving the Minister power to modify it goes to the point of excluding the provision altogether, contradicts the provision. It is undesirable to pass legislation here saying that a certain thing should be done or should not be done and then saying that no matter what the Bill, the Minister may modify any of the provisions.

Again, I support Deputy Crotty in the view of section 14, that it might be undesirable, particularly at the outset, to provide a limit for all officers. If the consequences of that for a number of unions are that they will have a total change of directorship every three years, it would seem undesirable. I do not know whether that is one of the sections which can be modified by the regulations I have been talking about, but, indeed looking at it quickly, I see it is. This apparently is one of the things in respect of which the Minister can make modifying regulations. But, at the outset, in order to ensure that there is some continuity, we should remove the obligation on all directors to retire after the first three years. You could perhaps specify that the chairman should retire after three years, that the secretary should retire after four years and then after a certain period when you know that the directors have been elected at different times, you could then bring in a three-year rule which would ensure some degree of continuity, and prevent power slipping into the hands of some people without the prospect of change because nothing keeps anybody in authority on their toes so much as the prospect of change.

Generally I think the Bill is a prudent one. It is in accordance generally with the wishes of the credit union movement, with the wishes of Nora Herlihy and others who have done such marvellous voluntary work and who are deserving of every praise and approval which this House can give. I know this is given by all Parties and I join, particularly with my Fine Gael colleagues, in welcoming this Bill and reiterating that we should like some little time to think about it. The Parliamentary Secretary knows we are not a little distracted by whatever may be in tomorrow's Budget and our discussion of it in the coming weeks. On that account it is undesirable that we should be trying to consider the framework of the credit union movement, when it is likely to be put in second place.

There are just one or two comments I should like to make on this Bill. Let me say at the outset that, as one who is a firm believer in the idea of co-operation and who has, on numerous occasions in this House, advocated the extension of co-operation, I welcome the Bill. In fact, one of the remarkable weaknesses of the co-operative movement in this country has been the lack of development such as has taken place in other countries and particularly in the cases mentioned on page 1 of the Minister's statement, of Nova Scotia, and not merely in Nova Scotia, but in every country in the world where the credit union movement exists. For some reason or other, very few of us have followed in line with the co-operative movement in this country. I feel, however, that in view of the interest and the number of credit unions which have been formed here in recent years, this Bill will have the effect of further encouraging the establishment of these unions.

In the city of Limerick, we have a credit union which was established by the Redemptorist Fathers and is organised by the confraternity attached to the Redemptorist Church. This credit union, which has been in existence for the past four years, has been a tremendous success. The idea of co-operative saving, co-operative credit, is an excellent one and has been approved all over the world. It is a system which should suit very well the circumstances of this country, but I have often wondered why it was that the establishment of credit unions does not follow automatically the establishment of co-operatives in this country. Muintir na Tíre tried to promote credit also. The progress one would like to see is not being made so I sincerely hope this Bill will have the effect of extending the credit union movement. The question of control is important. From what I have seen and read of credit unions, I believe State interference should be kept to a minimum because the whole idea of co-operation is a coming together of people to work together for some purpose. Certain safeguards are necessary and I think those set out in the Bill are entirely adequate.

I welcome the Bill and I sincerely hope it will arouse a new interest in the idea of co-operative credit and lead to an expansion of this form of saving throughout the country.

I should like, first of all, to thank all the Deputies who have contributed to the debate and to express the appreciation of the Minister and his advisers of the complimentary remarks made in regard to the drafting of the Bill. It was not an easy task to fit this Bill within the framework of the parent Act and I think an excellent job has been done.

Deputy Donegan, Deputy Ryan and, I think, Deputy Pattison also suggested that we should give some time before Committee Stage to enable the details of the Bill to be considered. I suggest we leave it over for a period of three weeks. I believe that should be adequate because for one thing the Credit Union League has been pressing very strongly since the report of the Committee on Co-Operative Societies was published, for the implementation of the recommendations in regard to credit unions. In the second place, I think it is true to say that the report itself could fairly be described as a White Paper. Thirdly, I want to assure the House that the Credit Union League at all stages of the preparation of this Bill have been fully aware of what was going on and indeed discussions in depth have been held at all stages, and more especially when certain proposals for different sections of the Bill from those normally obtaining internationally were put forward. For those reasons I suggest that a period of three weeks would be sufficient and I hope Members of the House will agree.

Deputy Donegan who welcomed the Bill mentioned that the credit union movement has spread rapidly throughout the 26 counties. In fact, it has spread rapidly throughout the 32 counties and that is a source of satisfaction to us. Several Deputies, including Deputy Donegan, mentioned this matter of insurance and Deputy Crotty, I think, regretted the fact that the insurance is placed outside the country. In point of fact, the reason for this may be stated simply to be that an international association is able to offer insurance through the National Credit Union League here to the component parts at a rate which bears no relationship whatever to the rate at which it would otherwise be available locally. In other words, this is another facet of the international aspect of the work here, that the insurance should be placed at a figure with which local insurance could not compete.

Deputy Corish mentioned something which is very dear to my heart. When he spoke of the lending of money, I think he had especially in mind lending money for agricultural purposes without security. This applies particularly to small amounts. It seems to me that the credit union movement has a very significant role to play from the agricultural point of view in regard to these small loans because they know the persons involved. All members having a common bond in the same community, they know the person involved and have the security of their knowledge of him which is far better than any security a stranger could offer.

I believe that the experience in regard to getting money back from unsecured loans of this nature will be very good. I have always believed that if you know a person's back-ground, his general temperament and his record in regard to credit, then I think you know whether you should lend him money in the first instance and also know when and when not to require security.

It is equally true that the credit union movement ought to release a lot of money which is now stuffed in mattresses throughout the country, and I sincerely hope it does. So far as the one hundred odd unions existing to date are concerned, the evidence is that it does prise loose a good deal of money which otherwise would not come to light. Indeed, I suggest it is not an idle boast to say this is one of the things of which the movement is particularly proud, that it unloosens a lot of money which would not otherwise become available and makes that money available to people without security.

Mention was also made of the Post Office. I suppose it would not be politic of me to say anything much about the rate of interest which the Post Office is paying to investors at present. As the House knows, a Committee is sitting to consider this and related questions but I feel I would not be going too far if I suggested that one of the recommendations of the Committee will be that the rate of interest for Post Office Saving Bank investors should be increased. Indeed this is relevant to this debate only in an indirect way and I do not think I am called upon to say any more in regard to it.

Deputy Ryan asked the number of unions in existence in the country which are not affiliated to the National League. It is very hard to give an estimate of this. The vast majority of those already in existence are affiliated to the League because it is obviously to their own advantage that they should be so affiliated because of the technical and other assistance which the League is already giving to the movement throughout the country and on its expansion, the greater assistance of one kind or another that it will be able to afford. It is not possible to say exactly but the figure is possibly 12, 15 or 20 but not more than that, of existing credit unions where they are identified.

Deputy Ryan also mentioned section 35 of the Bill. This is the section in which the Minister is given power by regulation to amend certain provisions of the Act. I share his misgivings with regard to the blanket subsection at the end. I agree with him that it is neither good nor desirable that one should read through an Act and see what one regards as definitive, only to find some subsection tucked away towards the end that undoes that impression. I undertake to have a very careful look at that particular part of section 35, although I am sure the House will agree that the necessity for having as much flexibility as possible is there.

I am sure the House will agree that it is desirable that the Minister should have the power, by regulation, to make changes rapidly where they appear to be necessary. I believe that the exercise of the Minister's powers on this occasion will, in practice, turn out to be quite small because the movement appears to be heading for a good rather than a dispiriting future. However, I do think that the necessity for flexibility should be recognised and that the Minister should be given the broadest possible powers by regulation, to make such changes as his advisory committee may recommend. One can go too far in this direction and, being a lawyer myself, I appreciate the purpose of Deputy Ryan's remarks and will keep them in mind when considering the section between now and Committee Stage.

Deputy Ryan asked another specific question about the second part of section 32. In that respect, section 35 (k) gives power to the Minister to modify the requirements of section 32. That appears to cover that, although, again, we can have a look at it later on.

Mention was also made of section 14 and the advantages and disadvantages of a rigid prohibition against directors serving for more than three continuous years. I think there is validity in this criticism and, between now and Committee Stage, I think we will introduce a suitable amendment to have regard to the desirability (a) of some form of continuity of service and (b) of not having a situation like that of chairmen of boards of the GAA who are there for, perhaps, 40 years.

Deputy Corish mentioned quite a number of detailed points with which, as he said himself, we might deal more aptly on Committee Stage. He mentioned the ten per cent limit on the dividends and asked why the figure of ten per cent was arbitrarily fixed. At a time when the Government are borrowing at seven per cent, it is necessary to cover that fact. In any event, the figure is a maximum. Its presence in the Bill does not preclude a credit union from lending at whatever rate might seem advisable from time to time.

I think it was Deputy Corish, also, who asked whether advisory committees as we envisage them in section 27, are operating in other countries. The answer to that question is in the affirmative. In the United States and in other parts of the world, a similar advisory committee is in operation. Obviously, we shall have to pay the members of this committee. I think it is more than desirable that we should do so because otherwise I do not think we would get people to work in what will turn out to be, in effect, a permanent working party. Obviously, the members of that working party will be drawn partly from the chief body in Ireland, the Credit Union League, and partly from other interests.

I hope Deputy Pattison will not have to make any comments on the lines of those he made this evening, which he put with considerable finesse and which I understood perfectly. I want to assure him that I shall try to ensure that those who are nominated to this committee will have an obvious reason for their appointment.

One of the things that the Credit Union League are there to do is to bring out, in handbook form, a book of rules and also a brief statement, for the benefit of the members, of the main rights, privileges and obligations enshrined in the Bill, when it is enacted. I do not know if it would be feasible or even desirable to put the whole Act into a handbook. I think one can rely on the League who will have the experience of other countries to help them to produce a handbook which will not leave out anything of significance with regard to the rights, duties and obligations of the members.

I was also asked about refusal of membership and whether the provision in the section, which gives a person the right to go to the district court, is or is not a new one. In fact, it is new. In the 1893 Act, the person who is refused by the registrar had to go to the High Court. For various reasons we consider that this would place too great a burden on the person involved. We consider that, at this stage, anyate way — having regard to the cost of High Court proceedings about a matter even as technically easy as this — the district court is the right and proper tribunal while, at the same time, the right is preserved to appeal to the High Court in the event of a point of law arising.

In my limited experience of the credit union movement and practice, one of the greatest advantages of it is that it encourages people, more especially in country towns, to spend their money in their own region. The word "regional" is mentioned in the Bill as an example of a common bond. Nothing is more important — for the country areas, anyway — than this emphasis on the regional aspect of this co-operative movement. It has always been a source of annoyance and astonishment to me that people living in small rural towns spend such a vast proportion of their money in Dublin or Cork or some other place rather than at home. One of the features of the credit union movement is that it has finally brought home to people the desirability of remembering that charity begins at home.

Again, I thank all the speakers in this debate for welcoming the Bill. I hope that, when the Committee Stage is reached in three weeks time, we shall not, in the meantime, have been too obsessed with irrelevant matters such as the Budget.

Question put and agreed to.
Committee Stage ordered for Tuesday, 29th March, 1966.