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Dáil Éireann debate -
Tuesday, 25 Feb 1997

Vol. 475 No. 4

Private Members' Business. - Credit Union Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Before the debate was adjourned I said we must not fail to recognise the difference between credit unions and other financial institutions. The legislation is designed to cater for an updated and modern credit union movement. There has been a strong demand for the introduction of the legislation but it is important to remember that we are dealing with a non-profit making voluntary organisation and not a bank or building society. The legislation must mark the difference between credit unions and other financial institutions.

The number of credit unions has increased significantly since the establishment of the first credit union in 1958. There are now approximately 430 credit unions, while the money on deposit amounts to approximately £2 billion. Since 1958 only one Act has been introduced to deal with the structure of credit unions, namely, the Credit Union Act, 1966. The introduction of this legislation is, therefore, timely.

The legislation will ensure that the benefits which have accrued to local communities from the establishment of credit unions will continue. Credit unions have enabled thousands of people who would not have taken out a loan with a bank or building society to secure finance to buy cars, televisions, videos, etc. This type of co-operative spirit and investment of local money in communities is unique to credit unions. This is why it is important for the legislation to mark the clear distinction between credit unions and other financial institutions.

The credit union movement has given local communities a great sense of empowerment. The appointment of local directors, the involvement of local people and the investment of money locally is very important from the point of view of community development. I hope the contact between local enterprise boards, community groups, etc. and credit unions can be further developed in the future. The extension of the maximum lending period will enable credit unions to offer loans to small enterprises and industrialists and will enable local interest groups, enterprise boards and companies to obtain funding to develop. This is a natural follow on from the present position.

Concern has been expressed about the limits being imposed on deposits, shares, loans, etc. However, if the credit union movement is to retain its separate identity and not become another bank, some limit must be set. This will enable the movement to grow and expand, while retaining its distinctive features. The limits proposed by the Minister are reasonable and will enable credit unions to maintain and develop their essential services. The Minister discussed these matters with the Irish League of Credit Unions and he is willing to take on board suggestions made by it and other interested parties, including Deputies. His proposals are reasonable and while concern has been expressed about the limits it is important that credit unions maintain their status as local non-profit making voluntary institutions. The extension of the maximum loan period will give credit unions the option to offer loans for commercial development, an option it did not previously enjoy. The Minister deserves praise for introducing this change.

There has been a significant increase in recent years in the funding invested in credit unions and in the number of people working voluntarily in the movement. There has also been increased liaison between the credit union movement and voluntary organisations. I welcome the close cooperation between credit unions and rural organisations, particularly farming groups. This has brought more people into contact with credit unions and ensured a new source of funding. The future of credit unions lies in developing new and close associations with the various sectors of society. Up until the 1980s most investors in credit unions came from one sector of society. This has changed and credit unions now deal with people from many areas in society. This will enable the movement to grow and prosper. The legislation will enable credit unions to attract more investors, thereby increasing the amount on deposit.

Because of the increases in investment and borrowings, it is important to put in place proper supervisory arrangements under which lenders and borrowers are fully protected. The Minister of State's approach in the legislation is quite proper and not over the top. He is simply ensuring that people can invest in credit unions in the knowledge that their money is absolutely safe and can seek loans in the knowledge that their applications will be dealt with properly. Any financial institution, large or small, needs to have such rules. If we want to see the credit union movement grow, we will have to have certain guidelines and regulations to protect the consumer. This legislation does that without hindering the development of the credit union movement in any way.

This is an extremely important Bill which will help ensure the continuing growth of a financial institution which is of growing importance to local and rural communities. I congratulate the Minister of State on bringing forward this legislation which has been long sought, particularly by those involved in the credit union movement. I am sure the Minister of State will listen to constructive amendments.

Many people are interested in this legislation. The Minister of State has listened to the Irish League of Credit Unions and I hope he will continue to do so. With some credit unions having greatly increased in size, the legislative demands and requirements of credit unions can vary dramatically. It is not a question of every credit union requiring the same results from this legislation. In my constituency there is a huge difference between the one or two very big credit unions and those which are focused on small villages and rural parishes. When I spoke to members of the credit union movement I sensed differences in their responses to the Bill. When we meet groups such as the Irish League of Credit Unions we must remember that the needs and requests of small credit unions may be quite radically different from those of larger ones.

I know the Minister of State will listen to all the arguments and take on board what is necessary in order to allow the credit union movement to develop and expand. The organisation has been tremendously beneficial to hundreds of thousands of people over the past 40 years and can continue that excellent work in the years ahead. This legislative framework is warranted and I hope the Bill will be passed over the next few weeks.

I welcome the opportunity to make a brief contribution on this very important Bill. Having waited for a long time and having seen so many deadlines come and go, many people could have been forgiven for thinking that the Credit Union Bill would never materialise. However, it arrived just before Christmas. I express my thanks to the Minister of State, Deputy Rabbitte, for bringing the Bill before the House.

It is a lengthy, detailed and complicated document and, like most legislation, it does not make for easy reading. It runs to 145 pages and includes 14 Parts, 188 sections and five Schedules. It is also a weighty Bill in terms of its significance as it is the first consolidating legislation for credit unions since the State was founded. It repeals all the existing Acts dealing with credit unions, which date from 1893 to 1978. When passed, it will have major implications for the future of the credit union movement.

Overall, the Bill offers some welcome improvements which the credit union movement has been seeking for years. Its highlights include provision for more flexibility on withdrawing shares and deposits, for allowing people under 16 years to join credit unions, for loans to be made for periods longer than five years, for credit unions to participate in savings protection schemes for statutory fraud or dishonesty insurance, and to allow credit unions to provide additional services.

Many meetings have taken place about this legislation. The Minister of State, Deputy Rabbitte, attended a special meeting of the credit union movement in Limerick. At that meeting a motion, requesting the meeting to instruct the board of the Irish League of Credit Unions to convey to the Minister of State that the Bill as published is unacceptable and to engage in negotiations with him with a view to securing amendments in line with the views expressed by the movement, was passed.

The Bill has given rise to a great deal of discussion among credit unions and their members. The Minister of State described it as a state of the art Bill. That view is not shared by many members of the credit union movement. It merely erodes the influence of credit unions and the voluntary concept established over many years. It also erodes the worthwhile provisions of the 1966 Act.

The credit union movement has a tremendous national profile. There are approximately 432 credit unions here with in the region of 1.6 million members. Savings through credit unions amount to almost £2 billion and loans to approximately £1.5 billion. There are approximately 600,000 borrowers and 10,200 volunteers working in credit unions. The credit union movement operates on a voluntary basis. It employs approximately 172 full-time and 583 part-time employees. This legislation attacks the ethos of that organisation.

I have witnessed what credit unions mean to a local community in my home town of Tralee, especially at Christmas time where they have counteracted the money lenders who, for many years, created havoc for families who were not in a position to make repayments after the Christmas period. Credit unions have lifted communities out of poverty and unemployment and made life easier for poorer families, many of whom are now excellent members of the credit union movement. They have given hope and dignity to people whose futures were very bleak.

I do not want to appear parochial, but I must refer to Tralee Credit Union, one of the most successful credit unions in the country. It developed, not due to a marketing campaign, but because of the service it provided to its members. It is owned and run by its members and sets out to serve their needs. Kerry has a total of 12 credit unions with in excess of 55,000 members, all of which are most innovative in terms of new services, but they will be undermined by this legislation. The Tralee Credit Union issues travellers cheques and foreign currency. It also has schemes including safety deposits boxes and start your own business loans, among many others. The credit union movement in Kerry is community based and promotes many projects in the area. There is a strong commitment to the co-operative movement within the credit unions in Kerry.

In national terms most people's lives have been improved by credit unions. Approximately half the country's population, 1.5 million people, are members and it is important that we cater for them. We can be proud of what the credit union movement has achieved. It is the most successful co-operative movement in the country. It has enabled many people to become self-reliant and has created a community spirit among our people. The co-operative concept is strong throughout the Minister area.

One has to be pleased that people can be motivated by something other than material gain. Credit unions do not make profits; they are owned and operated by the members for their own benefit. Anybody who wishes to join can do so. They are fundamentally different from other financial institutions and levelling the playing pitch should not impact adversely on the credit union ideal.

It is stated in the explanatory memorandum that the Bill has two main purposes, to provide for the development of credit unions and for increased regulation of the movement. In the past, each credit union regulated its own affairs. We tend to go overboard with regulations. If we over-regulate credit unions we will destroy the voluntary concept that has developed in the credit union movement over many years. Who will give up their free time to work in credit unions if they are subject to regulation by faceless people in Dublin who have little interest in their local area?

How can the Minister of State claim the Bill provides for the development of credit unions when they will be restricted in what they can do for their members? The Bill restricts the amount of savings a member can have with a credit union, but there is no reason for such a restriction. Under current legislation people may save as much as they like with a credit union. The proposed restriction is not a new development. The Bill also restricts to £20,000 the amount a credit union may lend — up to now the only restriction was the provision relating to 10 per cent of assets. Is that development? In this day and age £20,000 is considered a very small loan. Many credit unions have been developed, one of which in the Dublin area grants substantially higher loans than that provided for in the Bill. How can we regulate for what was done in the past? A sum of £20,000 would not buy a car in some cases or fund an extension to a home. This restriction will retard the development of credit unions.

Up to now credit unions could invest in property to benefit their community, but under the Bill they will be unable to buy property or invest funds over and above 0.25 per cent of surplus funds in the social and cultural aspects of the community. That is not development. I appreciate the Minister intends to bring forward amendments and I urge him to apply commonsense in doing so.

The limit on loans should be based on the size of credit unions and members should have the right to decide what they wish to do with surpluses. Credit unions should be allowed lend money based on their membership and asset value. This Bill is modelled on the operations of the Central Bank which controls the banking system. The Minister of State said he received several submissions, but it seems as if he only met people from banks or other financial institutions, otherwise somebody in his Department favours the banking system. The banking ethos is evident throughout the Bill.

Recent press reports outlined the results of the privatisation of a building society. I support privatisation and believe in the free market, but people should not be allowed earn in excess of £500,000 per year. Those people claim they deserve large salaries because the company is successful under their management, but it is difficult for people on low incomes to accept that statement. Many of the people on such high salaries have shares in the equity market which has grown over the years.

We must curb the granting of such large increases in salaries, which is evident not only in the financial area but in all sectors of industry. It is not good for society to see a small number of people getting such large salaries to the annoyance of people who work hard and receive a mere 3 per cent or 4 per cent increase each year. We must legislate to prohibit the practice of granting large increases in salaries because it has a bad influence on the community. On the other hand, credit unions, which are voluntary organisations, are being greatly restricted by the Bill.

I appreciate the work of the credit union movement over the past 40 years, particularly its philosophy which is being eroded to some degree by the Bill. It brings the credit union movement into the era of political correctness, and the House is aware of my views on that heinous philosophy. I also appreciate the people who have worked in credit unions over many years.

When I had the honour of being Minister for Defence, I received an excellent submission from PDFORRA. That is a terrible name for an association and should be changed; "other ranks" is evocative of another era. The submission outlined that the Defence Forces did not have a credit union. I am pleased to say that, before I ceased to be Minister, I approved the setting up of a credit union in the Defence Forces. I humbly submit that is one monument to my period as a Minister in that Government.

The credit union movement should be allowed to develop unhindered. I accept it may have to be regulated although I do not necessarily agree with the limits. I do not suggest the people who operate credit unions do not do so with honour, dignity and responsibility, but in circumstances where large sums of money flow into this exceptional movement, some of the Minister's proposals should be operated.

I do not want to diminish the philosophy of the credit union movement which means a great deal to our party. The credit union movement gave hope to people who did not have any hope. It gave dignity to the community and encapsulated the original philosophy of sinn féin, we ourselves. The credit unions got on with the business of what they regarded as being in the best interests of the financial needs of their community. That was part of credit union philosophy in rural Ireland.

Credit unions were then established in the cities where the wretched moneylenders operated. If credit unions did nothing else they diminished the influence of moneylenders on communities in our inner cities, and that is to their eternal credit. I acknowledge moneylenders continue to operate in our cities and are an appendage communities can well do without, but part of the philosophy of the credit union movement, which I hope will continue, is to ensure that people who are tempted to use the services of moneylenders go to their local credit unions instead where they are treated with respect and their dignity is recognised. That is important in the context of the way the credit union movement operates.

As far as the continuance of the movement is concerned, I hope it realises the aims and objectives of its original founders and is not diminished in any way as a direct result of this legislation. I have not examined the Bill in great detail, mainly because it is a long, complex document, but I heard representatives of the credit union movement address the Fianna Fáil Parliamentary Party. They made an extremely impressive presentation during the course of that meeting which highlighted once again what the credit union movement has done for this country.

Credit unions are operated on a voluntary basis by people who identify problems in their community and offer solutions. Many problems have been resolved by the credit union movement. It is to its eternal credit that it has survived over many years with leadership from dedicated men and women who offer their services on a voluntary basis. I cannot give them enough praise. This is the type of philosophy this country should adopt, irrespective of the political party in power. The philosophy that was responsible for setting up the credit union movement is as relevant today as it was decades ago.

I hope the credit union movement will not be brought into the era of political correctness as a result of this legislation. I would like an assurance that the flexibility or the philosophy of the credit union movement will not be interfered with or circumscribed by the legislation. While I realise the Minister of State must act on the advice available to him, the credit union movement is concerned with some aspects of the Bill. I understand he met members of the movement and gave them some assurances which I hope are reflected in his response to this debate.

I wish to share time with Deputy Crawford and, as he has more money than I in the credit union, I will allow him the greater share of my time.

I am sure that is agreed.

It is refreshing to note that, for a change, the Bill is basically non-contentious. Despite one or two hiccups, Fianna Fáil welcomes the legislation. There should be more consensus in the House and not the confrontational cockpit and farce that takes place every morning which would shame Billingsgate fish market.

That would be too bland.

It is a credit to the Minister of State that Fianna Fáil supports the Bill

The credit union movement has been the greatest phenomenon in my lifetime. Its success could not have been foreseen. It swept like a forest fire throughout the nation and opened doors of opportunity for thousands of people which were previously closed and bolted by the traditional banks. The working class, who have benefited most from the credit union movement, were not wanted across the threshold of banks until the advent of the credit union movement. Thousands of people in towns, cities and rural communities have benefited. It is a people's movement that has not as yet been infiltrated by the vultures of the financial world. Profits are distributed among the people. Many elderly people in remote country areas who mistrusted insurance companies and traditional banks joined credit unions because of the ground swell of support for them.

The credit union movement has been the greatest success story in the 80 year history of the State. It has opened a new avenue of opportunity for working class people. The entire country has benefited. It has allowed parents borrow for their children's benefit, from confirmation to university fees. It has enabled hundreds of young people to go to university and face the future with increased hope. Families can also borrow for cars, holidays, weddings, funerals and many other occasions. It has had greatest impact on the farming community, particularly small farmers, who have borrowed for stock, plant, machinery and to cover lean times.

Staggering advances have been made in communities as a result of credit unions. Dundalk was one of the first towns to affiliate to the Irish League of Credit Unions and its savings has reached millions of pounds. There are 1,700 members in the Ravensdale-Bellurgan Credit Union, with savings in excess of £1 million. Savings in the Cooley Credit Union are in excess of £3 million. There is not a family in those parishes who has not benefited from the credit union movement.

I welcome the upgrading of the 1958 Bill. This has also been welcomed by the Irish League of Credit Unions and I compliment the Minister of State on his willingness to meet representatives of the league. Not every Minister is willing to liaise with vested interests. There is no Minister more suited to the role of liaison than the Minister of State, Deputy Rabbitte. The league is seeking more liaison with the Minister and some compromises. It accepts that regulation is necessary and basically welcomes the legislation.

The Bill has countered with telling effect the awful parasites who live in our midst, those whom Deputy Andrews called "wretched moneylenders". Those people — if one could call them people — are the greatest parasites in our society. They are vultures who should be stamped out. I look forward to the introduction of legislation to stamp out that type of vermin. The credit union has countered their presence in our midst and has been a great source of relief to hundreds, possibly thousands, of people who have been caught in the grip of these wretched parasites.

The aspect of the Bill which most concerns the League of Credit Unions is the cap on deposits and loans of £20,000. There may be financial reasons for this which have passed over my head but £20,000, while it is a lot of money to some, is not a huge amount. Thousands of people have gone to credit unions to buy and build houses and to build extensions to houses. There should be no cap because credit unions have been run in an exemplary way. It is remarkable that over the years no hint of scandal has been associated with the credit union movement, unlike the banks and the insurance industry. Credit unions have a purer input because they are community inspired and involve the community. Rather than us regulating them and creating standards by which they should abide, perhaps they should monitor us. If the State was run as well as the credit union movement, we would learn a lot.

I thank the Minister for introducing this Bill and hope he will accept a couple of amendments on Committee Stage.

I, too, welcome the Bill. The Opposition, in particular, has demanded that the Credit Union Bill, 1996, be brought before the House quickly, although it had seven and half years to do so but did not. That is all the more reason to congratulate the Minister for introducing this detailed legislation which will involve much debate on Committee Stage and which has been welcomed by the credit union movement.

The Bill provides for the development and regulation of credit unions. There are £2 billion on deposit in 434 credit unions, a remarkable achievement, and no money has been lost to any member, a point to which Deputy McGahon referred. The credit union allows for sickness by giving people time to repay. If one of its members dies their debt is cleared, a major burden their family does not have to face. Few other institutions would do that unless the member had taken out expensive insurance. Hundreds and thousands of people depend on the credit union for finance because they would not get credit elsewhere. More importantly, they get credit at a reasonable rate which they can afford.

The credit union provided £100,000, as a local contribution, to an enterprise centre in Clones, a town which has suffered more than any other in the past 25 years. No other body would give that amount of money to allow it to draw down European funds. That group, with the support of the majority of its members, provided much needed seed fund to make the development work. In Ballybay the credit union is building a new structure not only for itself, but it is providing state of the art accommodation for a health centre. That would not have happened without the credit union. Although small towns like Ballybay are often forgotten by Government, it was not forgotten by the committee of the credit union.

There are important issues covered in the Bill. Long-term loans are welcome, particularly for contract workers who cannot get funds from banks or building societies because they are not able to show P60s but they are known by their local credit union committee and can get money which they would not otherwise get. I came across a case where a man was given no option but to buy a lorry. He had driven a lorry for a company for some time but it suddenly decided to contract out the work. He, like many others, was able to go to his credit union and borrow almost £30,000. That is the reason I question the need for the £20,000 limit. Not many people need to borrow over £5,000 or £10,000 so if only a few people who cannot get money elsewhere need over £20,000, there is no need for this regulation. I hope we will be able to reach a compromise on Committee Stage.

I know of a community group which was able to set up a small enterprise. It was not in a position to get funding from a banking institution but was able to get it from its friendly credit union. I understand seven valuable jobs have been created. We often spend a lot of money going abroad to attract foreign investors but in my constituency of Cavan-Monaghan such jobs are important. I hope the Minister will find an opt out clause for these community groups when it comes to the £20,000 cap.

There is a worry in the credit union movement about over-regulation — for example, those whom credit unions decide should sign cheques. I have been told by those involved in credit unions that the legislation states cheques should be signed by a director, which would cause a serious problem. The directors and committee of a credit union know their staff. Given the credit unions record in self-regulation over the years, this is a matter around which we should find a way. While I realise we are now dealing with substantial amounts of money compared to when credit unions were set up, their record has been good.

The credit union movement depends on voluntary personnel and the committee structures which have worked well in the past and must be encouraged. These people do not take large profits or hundreds and thousands of pounds in salaries. Unlike many banks, credit unions do not remove the umbrella when it starts to rain. They are prepared to sit down with those who have over-borrowed or who face difficulties to try to find a way around the problem.

Many groups of workers depend on credit unions — Deputy Andrews mentioned one earlier — to look after their savings. Small farmers, to whom Deputy McGahon referred, caught in the 1980s when they found themselves paying up to 22 to 23 per cent to banks now realise the benefit of the credit union. It was unheard of 20 years ago for farmers to use the credit union but they use it now.

However, many people other than workers and farmers who live in poor quality accommodation depend on the credit union for money to replace windows, doors, etc. As Deputy McGahon said, they also use it to meet the cost of communions, weddings and other events. The credit union has a proud record and the legislation is long overdue. In the main it is a good Bill, which was demanded by the Opposition and the credit union movement.

The ability of the Minister of State, Deputy Rabbitte, and his staff will enable the small changes I mentioned earlier to be made. These will ensure the Bill is a historic step forward and brings credit unions into the next century so they continue to serve the people. The credit union movement operates across the Border and just ten days ago Mr. John Hume, MP, opened a new credit union office in the village of Iniskeen. Credit unions serve both sides of the Border and they are moving forward dramatically in my county. A new credit union office will be built in the coming months in Monaghan town and work has already commenced in Ballybay. A new office has been built in Cootehill which helped to build new houses beside it. The record of the credit unions is fantastic. I thank the Minister for introducing the Bill which will be a new beginning for credit unions.

I thank my colleagues for giving me the opportunity to contribute to the debate. The Bill has been a long time in gestation. It has been anticipated by many individuals for many years but it finally became a reality just before Christmas. It is the first legislation specifically devoted to credit unions for over 30 years. The purpose of the Bill is to provide a statutory framework for the development and growth of the credit union movement and to enable credit unions to provide an enhanced range of services to their members.

Given that credit unions are so widespread, it is difficult to believe that they were unknown 40 years ago and that the first credit union was only formed in 1958. By the following year, there were three credit unions, comprising just 200 members with a sum of £415 in membership holdings. The Credit Union Act, 1966, which remains the principal legislation governing credit unions, covered the organisation, operation and supervision of credit unions. However, there has been no legislation of substance since then.

The 1966 Act allowed credit unions to borrow and to make loans available to their members. It attached certain conditions to the making of loans. It dealt with the powers, functions, duties and constitution of the credit union board of directors and its supervisory committee and established the manner in which they reported to the credit union's membership. They were subject to the members in general meetings. It also provided for the keeping of accounts by credit unions and their auditing. It established the credit union advisory committee, which has been of use to people since then.

The credit union movement nationally is a wonderful organisation. It is a phenomenal institution given the huge number of people involved in it, its ethos and its operation. It is unbelievable that it can operate at the discretion of voluntary contributions in the main. For example, the 1995 figures for County Donegal show there were 14 individual branches, comprising 38,248 members. That is a considerable number of people by any standard who are catered for by an organisation which accepts them as they are. In 1995 they had contributed £32,584,979 in savings to the organisation and 11,485 people were in a position to borrow £21,712,467. That is a phenomenal record. There was not only the facility to save and take out loans but 249 people were working voluntarily in the true community spirit of the organisation. It provides full employment to 25 people and part-time employment to 17 people. These statistics are local but one only needs to examine the national picture to have an even more graphic view of the value of the credit union movement.

The Bill should be welcomed because it is the first consolidating legislation relating to credit unions. It will have major implications when it is enacted and above all it must maintain the special ethos of the movement and increase the services offered. I welcome the provisions which include more flexibility in terms of withdrawing shares and deposits, that people under 16 years of age can join credit unions and that loans can be over a period longer than five years. This will have major ramifications for many people. I am glad credit unions will be able to participate in savings protection schemes for statutory fraud dishonesty insurance. There is scope in the Bill to allow credit unions to provide additional services.

However, given that the Bill took so long to come before the House and that it includes inputs from detailed discussions with the Irish League of Credit Unions and the Registry of Friendly Societies, I am surprised it has not been greeted with unanimous approval. The Minister of State addressed the last two annual general meetings of the Irish League of Credit Unions and its conception of what should be contained in the Bill was conveyed to him on every occasion. Yet, many people feel the Bill is over-regulatory and intrusive, which is against the ethos of the movement in certain sections.

Nothing in politics is unanimous.

There was a time in The Workers Party when everything was unanimous.

Many people feel the Bill does not go far enough in terms of the services which could be extended but perhaps, on Committee Stage, we will have an opportunity to examine some of the outstanding issues.

The Bill provides for an increase in shareholdings, deposits and loans from £6,000 to £20,000. Why it is necessary to cap deposits at £20,000? Will the Minister clarify the exact position in relation to the indebtedness clause where a person can have £20,000 in shares, £20,000 on deposit and £20,000 on loan? Does this mean there is, in effect, a £60,000, £40,000 or £20,000 limit? The credit unions are most unhappy about the caps.

While the percentage of those who have substantial savings in a credit union may be small, the imposition of a cap of £20,000 will have a twofold effect. Those with over £20,000 on deposit will have no alternative but to find another institution in which to invest, while the capital at the disposal of a credit union will be reduced. This is not in keeping with the ethos of the credit union movement.

Until now, the impact on the local community could be taken into account in assessing loan applications. If the impact was likely to be positive, there was scope for leniency. The question that will be asked is: who will invest money in if they cannot withdraw it?

As a county councillor, I cannot understand why the credit unions are not given some encouragement to assist local authority tenants who wish to buy their homes. Although tenants can quickly produce proof of refusal by a bank and building society, they still find it difficult to provide the surety required by a local authority——

What is the average price?

It is approximately £30,000. I do not believe that people would race in their hundreds to the credit unions for finance, the number in each community who need to be helped in this way is consistent. What are the obstacles preventing the credit unions, which are community-led groups, from becoming involved in helping individuals to buy their homes? They should have the option to do so.

The credit unions have made a phenomenal contribution to the communities in which they are located. They are self-regulated, have provided training for their employees and not lost a single penny in 37 years. Any group with such a record should expect to receive a reasonable response when it expresses a wish to advance.

Will the proposed cap be revised? Will the Minister of State consider raising it to £30,000 or 5 per cent of the assets of the credit union concerned, whichever is the higher? Alternatively, will he consider removing it?

The Bill states that if the whole of a building held by a credit union ceases to be occupied for the purposes of the business of the credit union, the credit union shall dispose of its interest in that building as soon as it is practicable to do so. Many credit unions which allow charities and other voluntary organisations to use part of their premises were under the impression that they would have to vacate the building. As someone said to me, if the toilet was not being used the building would have to be sold. I am glad the Minister of State has clarified the matter. It is important that any other misunderstandings are cleared up.

Despite the credit unions proven ability to help themselves, there is concern that the registrar will assume responsibility for making minor decisions and in the process remove the right of the credit unions to regulate their own activities. This will affect their members sense of ownership. Many credit union members who give of their time voluntarily are under the impression that every "i" will have to be dotted and every "t" crossed under the auspices of the registrar. They will not agree to this as it will undermine the belief that the local community is in charge. If others are allowed to offer their penny's worth, I envisage members saying they are no longer interested and withdrawing quickly. There is, therefore, a need for clarity.

The registrar will have an increased workload in that he or she will have to prepare and maintain a public file on each of the credit unions throughout the country. What resources will be available to him or her to carry out this task?

There are stringent mechanisms in place in credit unions to ensure accountability. Rigorous examinations have been carried out and the registrar has been called in when needed to carry out inspections. They have not, therefore, been found wanting in that respect. They are very much aware of the need to have everything above board and run their operations as smoothly as possible.

The credit unions have expressed a wish to extend the range of services they offer to areas where strength in numbers can result in financial savings for their members. There will be scope under the Bill to provide additional services such as ATMs and other facilities, but scope is not provided for other developments that would not have financial implications for credit unions where they could use their strength in numbers to develop their capabilities. I hope the Minister of State will be amenable to expanding services that could be rendered in that regard.

Notice taken that 20 Members were not present; house counted and 20 Members being present,

Credit unions have stringent mechanisms to ensure accountability. They brought in the registrar when inspections were needed, but they have also carried out rigorous examinations. We should not over-expose credit unions, which are run voluntarily, to an outside influence because too much outside influence will result in the dissipation of the goodwill of those involved.

The ethos of the organisation is based on participation. On publication of the Bill the Minister of State said it was in good shape primarily because of the expert contributions by the Registrar of Friendly Societies and the credit union movement. That the Minister of State and former Ministers involved in the preparation of this Bill were able to get people to participate in putting forward proposals for the Bill illustrates the ethos of the credit union movement. Arising from ongoing consultations, the Minister of State also gave an undertaking that he expects to table amendments on Committee Stage following contact with the offices of the parliamentary draftsman and the Attorney General. I hope he will take account of the scope that exists to widen the limits applying to credit unions and to the movement of funds into local authority-type ventures that would greatly benefit local communities for which credit unions cater. The Minister of State gave a further assurance that he is open to considering all views and comments on the Bill. I trust that will be the case and he will try to maintain the ethos of the credit unions as community self-help institutions.

Credit unions have an excellent track record in guaranteeing the security of members' savings and that must be kept to the forefront of the Minister of State's considerations. As this legislation is long awaited, the Minister of State should ensure the spirit of the credit union movement is not interfered with through the imposition of a limit of £20,000 on savings, the unnecessary intrusion of the registrar and the restriction of services that can be introduced without legislating for the many other options that could be open at no risk to the league, given its combined purchasing power. I would like to think we could pass on to the next generation the valuable contributions received in the past, but look to the reality of the present. The provision to accept members aged 16 and younger is positive as is the provision to extend loans beyond a period of five years.

Will the Minister of State consider the importance of increasing the limit applying to credit unions, and maintaining his contacts with the league so that really worthwhile amendments will be made to the Bill and in 30 years' time we will say this Bill was worthwhile?

I wish to share my time with Deputy Sean Kenny.

An Leas-Cheann Comhairle

That is agreed.

I compliment the Minister of State on introducing this Bill. Many parties and Governments have talked about introducing it and last year we all came under pressure to introduce it before the forthcoming general election. The Irish League of Credit Unions would welcome amendments to it and I am sure the Minister of State will respond positively on Committee Stage to such amendments.

I take this opportunity to pay tribute to people, particularly those in rural Ireland, who, for many years, voluntarily gave of their services to credit unions. I am mindful of the manner in which banks have treated customers in rural towns for many years. I accept credit unions do not compete with the banks, but many people in rural Ireland had to depend on credit unions when banks refused to grant loans to people living in housing estates on low paid jobs. When those people needed help the banks were not there for them. They were there for people who were able to secure loans from three or four banks, but the credit unions looked after the poorer people.

As a member of the urban district council, I recall a major motion was put to the council on one occasion. The council wanted one of the three banks in the town to install a banklink machine, but the three banks refused to install one stating it would not be profitable to do so. Shortly after that one of the banks decided that perhaps it should install one and now there are three banklink machines and a cash dispensing machine at the credit union.

Achill has a large community, a good deal of tourism and many people visit it in the summer, but it does not have a resident bank. Yet in all these small places credit unions have set up, manned their offices and dealt satisfactorily with the general public. I do not see anything wrong with giving them more power, facilities or allowing them to compete with the banks.

Last week Allied Irish Banks announced a profit of approximately £420 million in the past year. The Bank of Ireland also recorded profits on which they are to be complimented. I observe the AIB venturing to America again. I hope it will be more successful there this time than on the last occasion when they made a serious mistake, resulting in Irish taxpayers having to pick up the tab and necessitating the urgent passage of Bills to offset the repercussions. If I engage in business and make a serious mistake I cannot approach the Minister for Finance or any member of the Government to introduce a Bill to save me from its disastrous results; I am left to sink. The same applies whenever one cashes a cheque, takes silver to the bank for conversion into notes or notes for conversion into silver. It is a continuous litany of "pay, pay, pay".

The credit unions should be enabled to compete with the banks in a small way. Like other Members, I have been contacted by constituents in relation to this Bill. One of their concerns, is that the maximum shareholding of a member is now capped at £20,000. Most people would be satisfied with the more realistic figure of £30,000. The maximum deposit permissible in the case of a member is capped at £20,000, whereas a figure of £50,000 or a percentage of credit union shares would be more realistic.

The maximum loan a member can obtain is £20,000 but constituents have made the case to me that a figure of £30,000 or £50,000 would be more realistic. For someone wanting to have a new kitchen fitted in their home, an extension built or windows replaced a figure of £10,000 or £12,000 would not be sufficient, especially if they want to replace carpets and curtains. A more realistic figure would be £20,000 or £30,000.

Deputy Martin might remember that the Fianna Fáil Government of 1989 abolished house improvement grants, a decision which I hope will be reviewed.

Deputy Ring has some hope.

It was the Deputy's party who abolished them. I hope such grants, even if capped, will be reinstated. However, we will have another opportunity to talk about grants.

Did Deputy Ring ask the Tánaiste for permission?

I see nothing wrong with credit unions owning their own property. In my home town of Westport they bought two properties in not very good condition, complied with local authority regulations and converted them into two beautiful buildings which are a credit to them. I see nothing wrong with credit unions being allowed to provide extra services for home loans, insurance and foreign exchange since they would not really be competing with the banks. In certain locations where there are credit union offices there is no bank. I think of places like Achill, Louisburg and Newport. Credit unions should be provided with full facilities and allowed to compete. The ultimate decision lies with the customer as to which of the two he or she prefers to deal with.

I hope many of these points can be examined on Committee Stage. I congratulate the Minister on having introduced this Bill. I have no doubt that he will table necessary amendments on Committee Stage and that the League of Credit Unions will be satisfied with the outcome.

It is great to see people involved in the credit union movement, providing such a valuable service for local communities. We public representatives frequently meet people in financial difficulty. Thankfully people in the west are not as badly affected by money sharks. The Society of St. Vincent de Paul and other organisations have worked closely with the credit unions. The former has dealt with people experiencing financial difficulties and has introduced them to a local credit union, enabling them to obtain small loans, in addition to teaching them how to handle their finances, how to borrow and repay loans within their household budgets. The banks are too large to cater for such people, they prefer to deal with more affluent customers or millionaires. Many people have obtained credit union loans for the purchase of houses, cars, extensions to their homes or whatever and have repaid them.

It should be remembered that this work is carried out by local volunteers. In the case of Westport I think of people like Liam Grant, Michael Gormley, Jackie Foley and Francis Geoghegan who devote so much time to assisting people to obtain loans whenever they need them.

I see nothing wrong with affording credit unions the extra powers they seek. Any bank that can make a profit of £420 million is more than able to charge its customers for the services it provides. Credit unions would not be competing with the banks. They are in a different league and have done a wonderful job for those in need of their services. The Minister has gone 95 per cent of the way to meeting their requirements. I see no reason for his not going the remaining 5 per cent. I look forward to assisting him with amendments on Committee Stage.

I am pleased to have an opportunity to contribute to this debate. Before becoming a public representative I had been a director on the board of a credit union in Raheny, now in my constituency. I am particularly glad that this long promised Bill has been introduced. The purpose is to update the Credit Union Bill, 1966 and set out a framework for the future development of the credit union movement. This is opportune and I congratulate the Minister on his initiative.

The credit union movement has progressed in leaps and bounds since 1966 to the extent that it is now timely to recognise that fact legislatively. In the Minister's introductory remarks on Second Stage, I was heartened to hear him say he intended safeguarding the principles of community and self-help, the underlying principles of the credit union movement, since it was that commitment and dedication on the part of the community which had been my experience within the credit union movement.

Since 1958 credit unions, being non-sectarian, non-political organisations, have spread and operated on an all-island basis under the auspices of the Irish League of Credit Unions. The benefits of credit unions to the community are invaluable. In my constituency there are five, all very well organised, some with new buildings, incorporating modern, computerised systems enabling them to engage in modern financial transactions.

It is within the area of home ownership, particularly in the city of Dublin, that the credit union movement has played its most important role. For example, families who would not otherwise have been in a position to purchase a home have been assisted by credit unions to save the necessary deposit and provide essential financial advice. In the case of many people a credit union was the only financial body to which they could turn. Other bodies like the banks, which operate purely on a profit basis, would not have dealt with these people in the same manner.

It is true to say that within this State over the past 25 years — partly because of the activities of the Irish League of Credit Unions — a much larger percentage of our population is home-owning than is the case with most of our European partners, despite the fact that many of those countries have had a much higher per capita income than us in previous decades. This high level of home ownership has relieved the State of the responsibility and cost of providing public sector social housing.

Credit unions have played a significant role in allowing people to upgrade and refurbish their homes, construct extensions and so on. For example, I dealt with a case in my constituency today of a low income family wanting to provide an extension for a handicapped child. The shortfall between the disabled person's adaptation grant and other local authority financial supports was made good by a credit union loan without which such an extension could not have been provided.

Before the Minister for Education extended the principle of free education to third level, the credit union movement played an invaluable role in helping to put working class students through third level education. Sometimes the role of the credit union movement in this area has been overlooked because of the principle of confidentiality attached to their loans and transactions. It is crucial that the future development of credit unions facilitates this activity. The Bill will give an impetus to the desire of credit unions to provide a much wider range of financial services. This is a natural desire given the continued problems people experience in receiving fair treatment from some of our banks. However, it is essential that this development does not cut across the central principles of the credit union movement, which are the needs of the community and the provision of self-help.

Over the past number of months the credit union movement has brought to our attention a number of its concerns about the Bill. The Irish League of Credit Unions made a submission to a special meeting of the parliamentary Labour Party and we were impressed by the strength and conviction of its arguments. The Minister addressed a number of those points in his initial contribution. I understand some of the Minister's concerns about the maximum size of credit union shares and I welcome his commitment to ensuring that this keeps pace with changing times, inflation and the value of money. He also said that some people might use credit union savings to avoid tax liability, etc. and that possibility would also concern credit unions.

I ask the Minister to ensure the movement's evolving role in the housing sector is continued and in that light I also ask him to consider the Irish League of Credit Unions' concerns about section 41. Many credit unions have helped housing co-operatives and local initiative to develop and expand. The reference to property in section 41 should not restrict this important activity and I hope this matter will be addressed on Committee Stage.

From experience I know the important back-up and regulatory function played within the credit union movement by the Irish League of Credit Unions. When I was a director, the league played an important role in carrying out audits and assisting individual credit unions which had difficulties. The Minister is correct to put these functions on a statutory basis through the institution of a regulator. As the number of credit unions increases — I am sure they will continue to do so — it is important that the public be fully aware that regulations are in place. However, the Irish League of Credit Unions should not go out of existence as a result. I accept the Minister's point that the use of the term "credit union" should be limited to legitimate and recognised credit unions operating under the control of the registrar but I ask him to examine ways in which the Irish League of Credit Unions can be facilitated.

I congratulate the Minister on the Bill, which is another example of good legislation initiated by the Government.

This important Bill has generated considerable interest, particularly among members, volunteers and officers of credit unions. It had a long gestation period and considerable input was made by the credit union movement, other bodies and groups, the Registrar of Friendly Societies and successive Governments. It stemmed from the belief that it was necessary to establish credit unions on a modern, statutory footing. In that context it is somewhat surprising that the Bill has generated considerable opposition and concern from the credit union movement, not least as regards the sections dealing with caps on shares, deposits, savings and loans, the degree of regulation and the powers of the registrar to regulate the affairs of the credit union movement in the provision of additional services and its affairs generally.

It is widely agreed in the House that the credit union movement has been one of the most important agents for social progression and change. We can all point to our own communities; in Turner's Cross, Ballyphehane, Greenmount and The Lough, the credit union was perhaps the most radical mechanism for social progress and change. If it were not for credit unions, many people would not have been able to avail as successfully as they did of the improved economic conditions in the late 1960s and throughout the 1970s. Many house extensions were built and, as Deputy Kenny said, many people were able to pursue further education because of the availability of credit union finance. In my household during the period when I grew up, the credit union movement played a fundamental part in our improved living conditions, comfort and access to education. It provided people with a legitimate, safe and appropriate mechanism for obtaining loans for a variety of reasons — Christmas, Easter, buying new clothes at the start of the school year, etc.

Credit unions also prevented many people becoming victims of loan sharks and moneylenders. The phenomenon of moneylending grew dramatically in the 1980s although it existed long before that. In Cork we were aware of increased illegal moneylending and other less than desirable activities. The credit union movement in Cork intervened extremely effectively through the work of Mr. Brendan Roche of The Lough Credit Union and others. Together with the Department of Social Welfare they developed new schemes to enable people to avoid or escape the clutches of illegal moneylenders and develop a regime whereby, although they are on low incomes, they can meet their outstanding debts.

All Members of the House wish to create a legal framework which will enable the credit union movement to develop and grow. The Bill introduces some restrictions and I have read the Minister's justification for these limits. The banks and building societies are nervous about facilitating the growth of the credit union movement. As Deputy O'Keeffe said, the legislation has a banking ethos but one trusts that this Democratic Left Minister was not overly influenced by the banking and building sectors in framing the legislation and impositing caps. In The Irish Times today, he said the new role of the left was to curb the untrammelled momentum of the marketplace but that does not appear to be happening. From a left wing perspective one would have expected a Bill more favourable to the credit union movement, given its position in Irish society and its contribution to uplifting and improving the lot of working people and families on low incomes. The Bill is not favourably weighted in support of the movement. The banks and building societies are breathing sighs of relief at the publication of the Bill and the limited nature and scope offered to the credit union movement to develop and attract new members with reasonable incomes which they could deposit or invest in credit union shares.

No bank or building society had any influence on the Bill. I have not met them yet.

I argue to the contrary. The other alternative is, having read the Minister of State's Second Stage speech, that the Department of Finance won the day. There is no rationale behind the limits and caps in the Minister of State's speech so I suspect the Department of Finance's conservative approach, that tax foregone is tax lost, won out. The argument advanced is that simply because they favour the tax regime credit unions enjoy, one must be careful about allowing people to deposit too much in credit unions or to have too much savings.

There may be some truth to that.

That argument is not a strong one, given the limits imposed. The limitation put forward is £20,000 but one could go to £40,000 or £50,000. If one went as far as £60,000 one is not opening the door to massive tax evasion.

How far would Deputy Martin go?

The Minister of State's argument is that the fundamental basis for the limitation is tax avoidance. Corporation tax and DIRT were mentioned by the Minister of State, who went on to say that it is necessary to ensure that credit unions are not used as de facto tax avoidance schemes by unscrupulous individuals with significant personal wealth.

That viewpoint, which I suspect is that of the Department of Finance, has won the day on limitations. The limit is far too low. Government speakers have given examples where £20,000 would be in no way sufficient for people halfway through a mortgage, for example, if they wanted to finish it. Many people with Housing Finance Agency loans are still paying up to 12 per cent interest on their house loans. I recently met a man who borrowed a significant amount of money ten years ago and is still paying back the same amount of money.

Shared ownership loans are now available through local authorities. In five or ten years somebody may want to buy out their 50 per cent share in a house and a credit union might be their only option. It could cost more than £20,000 to buy out that remaining share.

For many people in the low to middle income groups, the credit union provides a safe way for borrowing and the psychological impact of that is very important. Local authorities have surrendered a significant amount of the market in loans and the banks and building societies are doing quite well. We all know people on low incomes who come to our clinics and who have a deep fear of going to a bank or a building society for a house loan. Their incomes are low and they fear that if they get into difficulty they will be evicted and their house repossessed. People with shared ownership loans are on low incomes and on the housing list. Their situation may improve and they might borrow a significant amount to buy out the remaining share. Credit unions have a useful role in that area.

The cost of adapting homes for disabled or elderly people has been going through the roof recently. The £8,000 grant now goes nowhere near meeting the cost of the extensions. In some cases, because somebody must put in a bathroom or a downstairs bedroom, further work such as the provision of a new kitchen may be necessary. The cost can rise to £25,000 or £30,000 even though the object of the exercise is to install the kitchen and bathroom. The local authority can only fund the aspect of the extension that deals with the needs of the individual for whom the grant was applied. People often have to make up the difference. The £20,000 loan amount is very low.

The Minister can make an order to raise it.

Its floor area should be increased now rather than returning to it year after year. The arguments on that are unconvincing.

We must be careful of the regulatory framework we put in place. This is a volunteer movement and more than 10,000 people are involved in credit unions. Left-wing parties love regulation but provide very little resources to see they are implemented. For example, there is a current craze for regulation in education but we will kill the voluntary impulse if we overregulate. People will get fed up and not volunteer. We will not give credit unions the resources to meet these regulations, as invariably happens. This House passes laws and regulations for all and sundry, placing obligations on credit unions in this case. We are very slow to match regulations with the necessary resources to meet them satisfactorily.

For example, it is unnecessary that the Registrar should have to satisfy himself as to the capability of the credit unions to introduce new services. The credit union movement has survived and progressed very well. Do we not trust people's capacity to judge the feasibility of new services any more? We are saying we do not with this legislation. It suggests that we want a "Big Brother" to decide, despite the fact that the Registrar is probably not familiar with existing obligations for a range of organisations. There is already a considerable backlog of cases in the Registrar's office and this legislation will add more. There is no guarantee that people will respond within a reasonable length of time. I have reservations about the new powers this Bill grants the Registrar.

We must be very careful not to destroy the voluntary concept of credit unions. The credit union movement was built on self-reliance and a strong sense of community. It is a co-operative movement and people should be given a certain amount of freedom. It is not a person's full-time job but something they are contributing to society. It develops spirit and cohesion in the community and if one brings in a framework that is too regulatory it is destroyed, because people are offended by too much intrusion by the State. I agree with Deputy Ned O'Keeffe's remarks on the State going overboard with regulations recently.

On savings, the Minister of State might give more details of the amount of tax benefit a person might gain by depositing £40,000 in a credit union. It would benefit credit unions to some extent to have customers who might want to invest in the community through the credit union. There could be small builders or publicans who want to help the community through deposits in the credit union.

Credit unions have played a leading role in trying to lift some areas designated as disadvantaged under the PESP. Many sporting, social and cultural groups have benefited from seed capital from the credit union movement and from a general involvement in it. For example, many credit unions have dramatically improved their own premises and the north side of Cork has seen reinvestment in the community through a variety of forms.

The limit on savings must be increased. What is involved here?

Either 26 per cent or 48 per cent with regard to interest, depending on whether one is on the marginal rate.

In terms of balancing what is more important in the overall context, I am not sure tax foregone would be phenomenal if we increased the limits to a reasonably significant extent. We would not lose that much in terms of tax revenue, despite the concerns by the Department of Finance. The same concerns apply to designated areas.

What about the extra schools the Deputy maintains are necessary? They cost money to build.

We would do far better if there was a rational programme for building schools.

We have already built many of them.

Given that the Deputy is a member of the Fine Gael Party, he has done badly from the share out of resources. We can and should improve the Bill considerably. Where did the breakdown occur regarding the advance consultations? I understood matters proceeded harmoniously until the negative reaction by the movement to the Limerick meeting.

It was one of the friendliest and most constructive meetings I have had the privilege to attend.

Yet considerable opposition emanated from it.

Views were expressed.

I take it the Minister of State will respond to some of the opposition because he signalled today that he will reflect on the limits and perhaps introduce amendments on Committee Stage? An opportunity will be presented on Committee Stage to improve the Bill and reflect the concerns of those involved in the movement.

The proposed regulatory regime needs to be considerably diluted. We must respect the relative autonomy which credit unions have enjoyed over the years and allow a proper and flexible framework within which they can develop. We must also allow for the introduction of new services without undue regulation and without waiting for the registrar to make a decision on the capacity of the movement in this regard. In addition, the limitations on loans, shares and deposits must be increased and we must allow the movement develop and grow and give the public continued opportunities to progress socially and improve their standard of living.

We owe a great debt of service to the credit union movement. The legislators and the State can often move too quickly to build on such a movement that has been built from the ground up with considerable voluntary effort. We could kill the goose that lays the golden egg by being too intrusive and by interfering too much in its day to day internal operations. We must be careful not to do this and to respect the fact that so many people are involved on a voluntary basis. We must also respect their opinions and reflect them in the legislation we eventually pass.

I wish to share my time with Deputy Flaherty.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

I welcome the Bill. I am proud to have a close relationship with the credit union movement. I thank the Minister of State for a remarkably good job on this complex legislation. It is a great step forward, although there are some aspects I wish to see changed. Many people in the credit union movement have sought legislation such as this for the best part of 25 years. There was little movement on anything to do with the movement since I was first elected to this House and I am grateful, therefore, to the Minister of State for the time and effort he has put into the Bill.

No movement other than the credit union movement has offered a financial helping hand to so many people who could not have got it from any other source. The ethos of the movement is self help and self regulation. It has attracted members from all strata of Irish life. There are 522 credit unions throughout the country. They are to be seen in town and country, in the small rural areas and in the biggest centres of population. The growth in credit unions reminds me of the big growth in the co-operative movement under the great Sir Horace Plunkett at the beginning of the century.

The credit union movement has reason to be proud of its achievements today. Working quietly at local level and unnoticed in high financial circles, it is a beacon to community development because it espouses the principle of co-operation and dedication and the mutual understanding of and interdependence of all people.

The most important aspect of credit unions is that they are non profit making and are strictly self regulated. Each of the country's 522 credit unions act separately but all are bonded by the same regulatory system. No other organisation with more than one million members can manage its affairs so astutely, wisely and with such transparency. I know of no hint of scandals, double dealing or fraudulent activities. Given the almost £700 million in share holdings, this is nothing short of a miracle.

The credit unions are run by ordinary, decent people who see the necessity to provide a badly needed service for their communities. When trained in credit union management, they deliver an excellent financial service to people, many of whom would not be welcomed elsewhere. It is a training that is of great importance to the movement and many hundreds of people give generously of their time.

However, the most enduring principle of any credit union is its ability to train its members in saving for whatever purchase they may require, whether it is a first holy communion dress, a holiday, a car, a new carpet or bathroom, a new tractor or new livestock. Members will not get a loan unless they have a certain amount of capital in shares. Many members of the public who are not members of credit unions do not realise that it encourages families to save first and purchase afterwards. This central concept encourages thrift and discipline, characteristics that enable the credit unions to grant loans to their members.

I welcome the decision to extent the duration of the loans. It was badly needed because the five year duration was too short. Since it has been extended it is a bonus which the league of credit unions wanted for some time.

Debate adjourned.