I am pleased to have the opportunity to speak to this important financial Bill. It is major legislation and ranks in importance alongside the Child Care Act, with which I was involved for a period of over 12 months and which was considered to be progressive social legislation. I hope this Bill will be viewed in the same way.
The credit unions, which are to be found worldwide, have served their members exceedingly well for half a century and are an important source of financial support. In recent years there has been much talk about the need for local initiatives and to adopt a bottom-up or self-help approach. The group water schemes provide a perfect example. Their members pledge to provide the necessary capital and put the organisational structures in place in the provision of vital infrastructure with State support.
The credit union movement is based on the same concept of local community involvement and management. They have the necessary personal knowledge of and confidence in their members and shareholders which is vital in making decisions in their favour. They are more approachable and accessible than the commercial financial institutions, which, with the aid of modern technology, transmit decisions quickly. Bank managers have had many of their discretionary powers taken from them and tend to be dictated to from high. They have to operate within strict parameters determined at national headquarters and regional level. The only obstacle in the way of credit unions is the legislation under which they have to operate.
Before I entered politics I was involved in the financial services sector and, therefore, have a reasonable knowledge of the industry. Credit unions give those who do not qualify for a credit rating or financial assistance from commercial financial institutions another option to purchase a motor car, tractor or furniture or to build an extension.
As the economy continues to expand, the credit unions are demanding they be allowed compete on a level playing pitch. They are in a position similar to that in which the Trustee Savings Bank found itself. I had the privilege of steering legislation through the House to allow it compete on a level playing pitch with the associated banks and other financial institutions.
The credit unions, which are owned by their members and shareholders, are run by supervisory, credit and management committees with the assistance of extremely dedicated professional staff. They deal with their clientele, investors and shareholders and those who require assistance on a personal and humane basis. The commercial financial institutions, on the other hand, look at one's account balance and take one's credit record into account. Where they are not prepared to fund small industry, the credit unions are often willing to step in and provide the necessary financial support. Their track record allowed them, after five years or less, to go to a financial institution for a loan to expand their business, create jobs and deliver economic growth to local communities in rural Ireland.
The credit union has played a key role. It is not only a financial and humane institution but also a major positive organisation. Apart from its financial work, it acknowledges community development, local organisations, schools and communities. It sponsors many initiatives vital to creating economic activity and community development. Its projects are imaginative and it creates opportunities for young people. It is open, accessible and positive unlike other financial institutions which, unless there is a major commercial opportunity, are reluctant to loan money in small communities but are prepared to spend huge amounts on a regional, city, urban or national basis because the return, according to their market research, will be greater. They do not have much interest in local communities and the average donation from a bank to a local effort is £25. The credit union does much more than that on a local basis by promoting the community and recognising their local membership. Its contribution to economic and industrial development is vital.
The Bill has been such a long time in gestation, I would have thought that, by the time it was published, it would satisfy the demands of the movement and that it would put the performance of credit unions on an equal footing vis-à-vis other financial institutions. There are over 400 credit unions in the country with huge resources, some of which hold deposits of only £500,000 in the case of small rural communities and up to £55 million in huge urban areas of high population density. Unions and civil and public service organisations have their own credit union movement with the facility of making automatic weekly deductions to create deposits and shares which are managed for the benefit of members. This gives them a huge advantage over people in rural Ireland who, in many cases, are ordinary individuals in need of money or have money to invest and are prepared to do so locally. They benefit from it by investing with their credit union.
In many small provincial towns, the credit union movement has made a major statement about its activities and confidence in local communities. It has invested wisely and acquired properties in key locations. It has either built new facilities or acquired existing buildings and converted them into local, modern, financial services centres. It behoves us as legislators to ensure we provide clear, simple, positive and protective legislation which allows the credit union movement to grow, prosper and confer facilities and services on its members similar to those of other commercial institutions. The latter lend money, to the benefit of their directors and investors, institutional or otherwise, whereas the credit union movement confers benefits on its shareholders and members as a non-profit-making operation. The credit union movement's tremendoes fixed assets in property in key locations in our communities are a statement that this country has made major progress and that the movement can now use its expertise and knowledge to expand its services and facilities to the benefit of local people. I hope this legislation will not impose further impediments on the movement.
When this Bill was published, we were told that there would be no difficulty with it and that it would be supported by the movement. From my consultation with members of credit unions, I know they are not happy with the restrictions being imposed. I had meetings with members of various credit unions, as did my political colleagues. They told us what they felt was being proposed in the Bill from their consultations with Department of Enterprise and Employment officials and with the Minister. I advised at those meetings that capping loans at £20,000 was ridiculous. We have been waiting a long time for legislation and it should take account of past performances, give the credit union movement confidence to expand, develop and deliver its services, utilise its resources, make a greater contribution to economic activity, sustain low interest rates and compete equitably and fairly with other financial institutions and ensure that credit union members prosper together with the country, the movement and other financial institutions. I am not convinced from my examination of the Bill and the accompanying memoranda and documentation and from what I have heard from the Minister and the movement that this situation will prevail.
I read the interview which the Minister of State, Deputy Rabbitte, gave to Review, the bimonthly magazine published by the Irish League of Credit Unions. He said he would listen to the credit union movement.
