The Workers' Party have very serious reservations about this Bill. It is being presented as a simple measure to provide for an extension of the Trustee Savings Banks range of activities but actually appears to be a back door device to facilitate the privatisation or, at least, the partial privatisation of these banks.
Section 5 is a particularly ominous inclusion given that it seeks to give the Minister power to alter the legislation in order to facilitate whatever the purpose — either transparent or hidden — in this Bill. It seeks to give him the power to do anything—
...which appears to him to be necessary or expedient for removing that difficulty, for bringing the provision into operation, or for securing or facilitating its operation, and any such regulations may modify any provision of this Act so far as may be necessary or expedient for carrying such provision into effect for the purposes aforesaid....
What is odd about this regulation and the Minister was serious about not giving this House the right to refuse him particular powers to change the Bill — is that he could have, at least, introduced a provision under the regulations where positive regulations would have to be made. In other words, a regulation would have to be placed before the House and approved, before it would be implemented. Instead the Minister is seeking to have this power and the usual negative regulation where unless it is rescinded by the House within 21 days of having been made, it then becomes law. I have argued on many occasions in this House against that type of regulation. It is all right in relation to a number of minor matters of detail, but in a situation like this where the Minister is seeking to change the legislation, not simply to implement it, it is not appropriate that that should be done. It is not appropriate in any event that it should be done by way of the 21 day negative type regulation.
Since I came to this House in 1982 no such annulling motion has ever been taken by this House despite the fact that I have tried to move a number of them on social welfare matters. The reality is that unless an Opposition party put down a motion in Private Members' time, then such a motion cannot be taken.
As Deputy Noonan has already pointed out, even that procedure is inadequate because it is a set piece debate which does not permit the kind of teasing out of regulations which would be possible if there was a committee type debate on the regulations. Indeed, if the Minister wants to change any legislation he should be obliged to come back to this House with a new Bill to have such changes debated and teased out as we will this Bill over the next few weeks. The whole intention of the Bill is suspect because section 5 will effectively give a free hand to the Minister to do what he chooses in regard to how this Bill will be implemented and how it may be altered during the course of its implementation over at least the first three years of its life. We will be vigorously opposing that section if the Bill passes Second Stage.
Any legislative measure affecting a bank requires the most careful possible consideration by the Oireachtas. Banks play a crucial role in the economy and decisions made by them have a direct impact — not just on their own customers but also often on hundreds of thousands of workers in firms whose lives and employment prospects can be directly affected by decisions made on interest rates and credit policy. Real control of an economy requires effective public control of banks, and that is true whether we are talking of the Irish economy or the wider European economy. Indeed, it will be a matter of debate in the not too distant future in relation to how monetary union will be implemented, what control the Central Bank will have and how they will be made answerable to national governments or the European Community generally.
In this country there is little public control of the banks with the result that there is only limited public control over the economy. The most striking example of this is the way in which Government Ministers can disclaim all responsibility for interest and mortgage rates, although these matters can directly impact on the living standards of hundreds of thousands of householders and the job security and employment prospects of many workers. What we want to see is more public control of the banks, but the purpose of this Bill seems designed to reduce public control over the one limited area where there is at present some element of accountability.
We should not make the mistake of thinking that in this Bill we are dealing with some minor or insignificant part of the banking system. The Trustee Savings Banks are big business. If the two existing Trustee Savings Banks were merged they would form the fourth biggest bank in the State. Between them they have 63 branches around the country with total assets of some £800 million, employing more than 700 staff.
Over the years the Trustee Savings Banks have successfully expanded and developed their business. There is much public goodwill towards the Trustee Savings Banks. Many people, who need the services of a bank but who do not wish to contribute even further to the obscene profits of the commercial banks, place their accounts with the Trustee Savings Banks because of their non-profit taking status. The Trustee Savings Banks have been imaginative and innovative. They were, I believe, the first banks to be computerised. Unlike the other banks they open at hours which seem to be designed to suit the customer rather than the banks. A recent Consumers' Association of Ireland survey showed that on a whole range of charges for bank services the Trustee Savings Banks compared very favourably with the other banks.
Having said that, it must also be said that there is an extraordinary aura of secrecy surrounding the operation of the Trustee Savings Banks. Their legislative origins go back to the 1860s. Very little information is available about the ownership and control of the Trustee Savings Banks and the whole question of the role of the trustees — how they operate and how they are appointed — seems shrouded in mystery. No information of this nature is given to account holders and their annual reports are similarly unhelpful, giving only a list of the names of the trustees but no details of their background or role. There is virtually no information in the reports of the Central Bank on the role of the Trustee Savings Banks, and up to yesterday there was not even a copy of an annual report of either of the Trustee Savings Banks available in the Oireachtas Library.
The question of the present ownership of the Trustee Savings Banks is crucial. Who owns them? Is it the depositors, the trustees or the Government? When legislation similar to this was going through the House of Commons a few years back in relation to the British Trustee Savings Banks, the same issue arose. Who owned them? There the question eventually went to the Law Lords who ruled that the Government owned them, much to the annoyance and embarrassment of the Thatcher Government, which then promptly privatised them.
It would seem that we are heading in the same direction here. That is the only reasonable interpretation that can be put on section 58 of this Bill. Let me quote from the Explanatory Memorandum.
Section 58 gives authority to the Minister for Finance to reorganise the Trustee Savings Banks into companies and to arrange for transfer of all assets and liabilities to the new companies. The Minister may make a draft order to give effect to any such reorganisation and the order shall not have effect until a resolution approving of the draft has been passed by the Houses of the Oireachtas. The new companies may be under the control of the Minister or some other person.
What is the purpose of this section if it is not to facilitate privatisation?
There are other serious implications of the Bill also. Under section 30 of the Finance Act, 1940, a major portion of the money deposited with the Trustee Savings Banks, amounting I understand to about 80 per cent of the total, is lodged to a special account in the name of the Minister for Finance. Put simply, the money is "on-lent" to the Exchequer, and at a very favourable rate of interest. Indeed, just this week the Minister for Finance made an order specifying the rate of interest to be charged on this account at a very attractive 6.9 per cent. Having this money available has saved the Government having to borrow it at normal interest rates. In the case of the Dublin Trustee Savings Bank the money "on-lent" in this way in 1988 amounted to more than £300 million.
However, under section 32 of this Bill the amount to be deposited in the Minister's account, or invested in Government securities, is to be determined by the Central Bank, after consultation with the Minister. This would appear to suggest that the portion of the Trustee Savings Bank deposits which will be made available to the Exchequer will drop below the current level. If this is so, then the Exchequer will have to seek that cash elsewhere, paying normal rates of interest. Despite the statement in the Explanatory Memorandum that there will be no additional cost to the Exchequer arising from this Bill, this move could result in a significant additional cost or loss to the public purse.
Another area on which we have grave reservations is the question of transferring responsibility for supervising the Trustee Savings Banks from the Department of Finance to the Central Bank. In theory giving the Central Bank supervisory powers over all the banks as well as the building societies should be a good idea, but in practice it has not been effective at all. The Central Bank have failed totally to exercise any real control over the commercial banks. They have failed to live up to the obligations placed on them by the 1942 Central Bank Act to ensure that in matters of credit policy, the interests of the community as a whole should predominate. Given the predominance on the board of the Central Bank of representatives of private profit in general, and the commercial banks in particular, it has not been clear if the Central Bank are controlling the commercial banks or the commercial banks controlling the Central Bank. The claim made by the American economist, Milton Friedman, that regulatory bodies are generally captured by those they seek to regulate has certainly been true of the relationship between the commercial banks and the Central Bank.
Last year responsibility for supervising the building societies was transferred to the Central Bank, but they failed at the very first test only this week, when they shamelessly failed to take any action to prevent the building societies from increasing their mortgage rates in excess of the 1 per cent general increase in interest rates for which the bank had signalled their approval. Handing responsibility over to the Central Bank also removes any element of accountability to the people through the Dáil. Ministers are able to disclaim any responsibility for decisions which can have a major bearing on economic policy and Dáil questions on matters of legitimate public interest ruled out of order.
I referred earlier to the mystery surrounding the manner of appointment of the trustees at present. This Bill is not much more forthcoming in this regard. Section 17 tells us that there is to be not more than ten and not fewer than five trustees for each Trustee Savings Bank. Section 18 tells us that they cannot be aged over 70, and section 19 tells us that bankrupts and convicted crooks are ruled out. But nowhere is there any guidance given as to what qualifications, background, or experience the trustees should have. Neither are there any details in the Bill as to the manner of their selection. This is to be provided for in the rules of the Trustee Savings Banks, which will have to be approved by the Central Bank. One significant change is that while the payment of fees to trustees has, up to this, been prohibited, they will now be paid what are delicately referred to as "honoraria".
Deputy Taylor in making a point in relation to the trustees referred to the men and women of the Trustee Savings Banks doing a good job. I have no doubt that the trustees in general do a good job, but looking through the 1988 annual report of the Dublin Trustee Savings Bank I note that there are 23 trustees who are all men. There are two vice chairpersons who are men, one chairperson who is a man and a chief executive and a general manager, both men. I do not know the proportions in relation to the rest of staff but certainly there are no women among those running the Trustee Savings Bank in Dublin. Perhaps that is something to which we should address ourselves when dealing with this Bill to ensure that fair and equal treatment is given to all sections of our community.
I am sure, as Deputy Mervyn Taylor said, that the people who have been acting as trustees up to this have been fine people, acting in the best interests of their customers and the public in general. What I am concerned about is that in the absence of specific provisions in the legislation regarding the manner of their selection, together with the changes in the status of the Trustee Savings Banks and the introduction of fees for trustees, we will have the development of a self-perpetuating, controlling clique, similar to those who run the building societies, drawing huge fees and expenses, and who will not be responsible nor answerable to anyone.
Among those who will be most directly affected by this Bill are the Trustee Savings Bank employees. What consultation has there been with them? Who speaks for the Trustee Savings Bank workers, most of whom I understand are not even in a trade union? Have they no rights in regard to those proposed changes? I would ask the Minister, when replying to this debate, to say what consultation, if any, there has been with Trustee Savings Bank workers.
Finally, I want to repeat that The Workers' Party are not hostile to the Trustee Savings Banks. On the contrary, we admire the work they have done in trying to give the public a banking service without extracting obscene profits from their customers, and want to see them expanded and developed. But why can this not be done without changing their non-profit taking status and opening up the way for their eventual privatisation?
We will oppose this Bill on Second Stage. If it gets through as I am sure it will, with the support of the Progressive Democrats, we will introduce some major significant amendments on Committee Stage to try to ensure that the Trustee Savings Banks do not change their nature.